RELIABILITY INCORPORATED
EXHIBIT 4.1.
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of
December 31, 1997, is between RELIABILITY INCORPORATED, a Texas corporation
("Borrower"), and ▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL ASSOCIATION ("Lender").
RECITALS:
A. Borrower and Lender (which was formerly known as First Interstate
Bank of Texas, N.A.) entered into that certain Loan Agreement dated as of July
1, 1995, as amended by First Amendment to Loan Agreement dated as of March 10,
1997 and Second Amendment to Loan Agreement dated as of August 15, 1997
(collectively, the "Agreement").
B. Borrower and Lender now desire to amend the Agreement as herein set
forth.
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 agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the meanings given to such
terms in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.01. Amendment to Certain Definitions. (a) Effective as of date
hereof, the definition of each of the following terms contained in Section 1.01
of the Agreement is amended to read in its respective entirety as follows:
"Commitment" means the obligation of Lender to make Advances
hereunder in an aggregate principal amount at any time outstanding up to
but not exceeding $4,000,000.00 as such amount may be reduced as provided
herein.
"Termination Date" means 11:00 a.m.. Houston, Texas time on December
31, 1999, or such earlier date on which the Commitment terminates as
provided in this Agreement.
(b) Effective as of the date hereof, the definition of the term
"Reduction Day" is deleted from Section 1.01 of the Agreement.
Section 2.02. Amendment to Section 2.03. Effective as of the date
hereof, the second sentence (which is also the last sentence) of Section 2.03
of the Agreement is deleted from the Agreement.
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Section 2.02. Amendment to Exhibits. Effective as of the date hereof,
Exhibit "A" to the Agreement (Note) is amended to conform in its entirety to
Annex "A" to this Amendment.
ARTICLE III
Conditions Precedent
Section 3.01. Conditions. The effectiveness of this Amendment is subject
to the receipt by Lender of the following in form and substance satisfactory to
Lender:
(a) Resolutions - Borrower. Resolutions of the Board of Directors
of Borrower certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery and performance by Borrower of this
Amendment and the other Loan Documents to which Borrower is or is to be
a party hereunder.
(b) Incumbency Certificate - Borrower. A certificate of
incumbency certified by the Secretary or an Assistant Secretary of
Borrower certifying the names and signatures of the officers of Borrower
authorized to sign this Amendment and each of the other Loan Documents to
which Borrower is or is to be a party hereunder.
(c) Certificates of Existence and Good Standing - Borrower.
Certificates of the appropriate governmental officials regarding the
existence and good standing of Borrower in the State of Texas.
(d) Note. The Note executed by Borrower.
(e) Third Amendment to Security Agreement. The Third Amendment
to Security Agreement in the form of Annex "B" hereto, executed by
Borrower.
(f) UCC Search. A Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against
Borrower in ▇▇▇▇▇▇ County, Texas and the office of the Secretary of State
of Texas.
(g) Legal Fees. Payment of the reasonable legal fees and expenses
of Lender's counsel.
(h) Additional Information. Such additional documents,
instruments and information as Lender may request.
Section 3.02. Additional Conditions. The effectiveness of this Amendment
is also subject to the satisfaction of the additional conditions precedent that
(a) the representations and warranties contained herein and in all other Loan
Documents, as amended hereby, shall be true and correct as of the date hereof
as if made on the date hereof, (b) all proceedings, corporate or otherwise,
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 (c) no Event of Default shall have occurred and be
continuing and no event or condition shall have occurred that with the giving
of notice or lapse of time or both would be an Event of Default.
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ARTICLE IV
Ratifications, Representations, and Warranties
Section 4.01. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect. Borrower and Lender agree that the
Agreement as amended hereby shall continue to be the legal, valid and binding
obligation of such Persons enforceable against such Persons in accordance with
its terms.
Section 4.02. Representations, Warranties and Agreements. Borrower
hereby represents and warrants to Lender that as of the date hereof, and taking
into account the provisions of this Amendment, (a) the execution, delivery, and
performance of this Amendment and any and all other Loan Documents executed 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, (b) the representations and warranties
contained in the Agreement as amended hereby, and all other Loan Documents are
true and correct on and as of the date hereof as though made on and as of the
date hereof, (c) no Event of Default has occurred and is continuing and no event
or condition has occurred that with the giving of notice or lapse of time or
both would be an Event of Default, (d) Borrower is in full compliance with all
covenants and agreements contained in the Agreement as amended hereby, (e)
Borrower is obligated to Lender pursuant to the terms of the Note, as the same
may have been renewed, modified, extended, increased and rearranged, including,
without limitation, renewals, modifications, increases and extensions made
pursuant to this Amendment, (f) the liens, security interests, encumbrances and
assignments created and evidenced by the Loan Documents are, respectively, valid
and subsisting liens, security interests, encumbrances and assignments (except
as provided in the Security Agreement) and secure the Note as the same may have
been renewed, modified, increased or rearranged, including, without limitation,
renewals, modifications, increases and extensions made pursuant to this
Amendment, and (g) Borrower has no claims, credits, offsets, defenses or
counterclaims arising from the Loan Documents or Lender's performance under the
Loan Documents.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan
Documents including any Loan Document furnished in connection with this
Amendment shall fully 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 on
them.
Section 5.02. Reference to Agreement. Each of the Loan Documents,
including the 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 Agreement, as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement, as amended hereby.
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Section 5.03. Expenses of Lender. As provided in the 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 documents and instruments executed pursuant hereto and any and all
amendments, modifications and supplements thereto, including, without
limitation, the costs and fees of Lender's legal counsel, and all costs and
expenses incurred by Lender in connection with the enforcement or preservation
of any rights under the Agreement, as amended hereby, or any other Loan
Document, including, without limitation, the costs and fees of Lender's legal
counsel.
Section 5.04. 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.
Section 5.05. Applicable Law. This Amendment and all other Loan
Documents executed pursuant hereto shall be deemed to have been made and to be
performable in Houston, ▇▇▇▇▇▇ County, Texas and shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 5.06. 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.
Section 5.07. 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.
Section 5.08. Effect of Waiver. No consent or waiver, express or
implied, by Lender to or for any breach of or deviation from any covenant,
condition or duty by Borrower shall be deemed a consent or waiver to or of any
other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.10. ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH
THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT AND THE OTHER INSTRUMENTS, DOCUMENTS AND
AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
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Section 5.11. Agreement for Binding Arbitration. Borrower and Lender
agree to be bound by the terms and provisions of Lender's current Arbitration
Program, which is acknowledged as having been received by Borrower and which is
incorporated by reference herein, pursuant to which any and all disputes
regarding the subject matter hereof or of any Loan Documents shall be resolved
by mandatory binding arbitration upon the request of Borrower or Lender.
Executed as of the date first written above.
BORROWER:
RELIABILITY INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
President
LENDER:
▇▇▇▇▇ FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
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