EXHIBIT 10.5
AMENDMENT TO LOAN AGREEMENT
AND MODIFICATION OF NOTE
THIS AMENDMENT TO LOAN AGREEMENT ("AMENDMENT") dated as of March 31, 1999
(the "AMENDMENT EFFECTIVE DATE") is made and entered into by and between ▇▇▇▇▇
SYSTEMS, INC., a Texas corporation (the "BORROWER") and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION ("LENDER"), a national banking association.
RECITALS:
WHEREAS, the Borrower and the Lender are parties to a Loan Agreement dated
as of August 30, 1996, as heretofore amended (the "LOAN AGREEMENT"); and
WHEREAS, the Borrower executed and delivered to the Lender the Note (as
defined in the Loan Agreement); and
WHEREAS, the Borrower and the Lender have agreed, on the terms and
conditions herein set forth, that the Loan Agreement and the Note be amended in
certain respects;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, IT IS AGREED:
SECTION 1. DEFINITIONS. Terms used herein which are defined in the Loan
Agreement shall have the same meanings when used herein unless otherwise
provided herein.
SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT. From and after the Amendment
Effective Date, the Lender shall have no further obligation to make any advance
under the Loan Agreement or the Note. In addition, on and after the Amendment
Effective Date:
(a) The definition of "EBITDA" set forth in PARAGRAPH 1.1 of the Loan
Agreement is hereby amended to read in its entirety as follows:
EBITDA means, without duplication, for any period, the consolidated
earnings of the Borrower and its Subsidiaries before depreciation,
amortization, other non-cash items, Cash Interest Expense, federal, state
and municipal taxes and extraordinary gains, PLUS proceeds received by
Borrower through additional capital contributions to Borrower.
(b) PARAGRAPH 2(C) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(c) On the earlier of February 15, 1999 or the payment in full of
the Facility Debt, Borrower shall, subject to the provisions of PARAGRAPH
10 hereof, pay to Lender a fee in the amount of $75,000.00.
(c) PARAGRAPH 2(D) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(d) On each of June 30, 1999, August 31, 1999 and December 31, 1999
(unless the Facility Debt shall have been paid in full on or prior to the
applicable payment date), pay to Lender a fee in the amount of
$250,000.00.
(d) PARAGRAPH 3 of the Loan Agreement is hereby amended to read in its
entirety as follows:
3. PROCEEDS REALIZED FROM SALE OF ASSETS OF ▇▇▇▇▇ OIL OF LOUISIANA,
INC.. Promptly upon receipt thereof by Borrower or any of its
Subsidiaries, Borrower will apply (or cause to be applied) to the Facility
Debt all of the proceeds realized from the sale, transfer or other
disposition of any of the assets of ▇▇▇▇▇ Oil of Louisiana, Inc. (net of
the reasonable costs and expenses payable to unaffiliated third parties in
connection with the applicable sale, transfer or other disposition).
(e) PARAGRAPH 6(B) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(b) Borrower shall furnish or cause to be furnished to Lender three
copies of each of the following: (1) as soon as available and in any event
within 90 days after the end of each fiscal year of each Obligor that is
not an individual, Annual Financial Statements of such Obligor; (2) as
soon as available and in any event within 45 days after the end of each
calendar quarter of each fiscal year of each Obligor that is not an
individual, Quarterly Financial Statements of such Obligor; (3)
concurrently with the financial statements provided for in SUBSECTIONS (1)
and (2) of this PARAGRAPH 6(B), beginning with the Quarterly Financial
Statements as of March 31, 1999, such schedules, computations and other
information, in reasonable detail, as may be required by Lender to
demonstrate compliance with the covenants set forth herein or reflecting
any non-compliance therewith as of the applicable date, all certified and
signed by an appropriate officer or other responsible party acceptable to
Lender on behalf of Borrower and a compliance certificate ("COMPLIANCE
CERTIFICATE") in the form of EXHIBIT C hereto, duly executed by such
officer or other responsible party; (4) on or before the 20th day of each
calendar month, (A) a listing and aging of the Accounts of each Obligor
which has executed a Security Agreement covering its Accounts as of the
end of the preceding calendar month, prepared in reasonable detail and
containing such information as Lender may request and (B) a summary of the
Inventory of each Obligor which has executed a Security Agreement covering
its Inventory as of the end of the preceding calendar month, prepared in
reasonable detail and containing such other information as Lender may
request; (5) from time to time, at any time upon the request of Lender,
but at the cost of Borrower, a report of an independent collateral field
examiner (which may be, or be affiliated with, Lender) with respect to the
Accounts and Inventory components included in the Borrowing Base
(PROVIDED, HOWEVER, that so long as no Event of Default has occurred and
is continuing, Lender shall not require such a report more than twice per
calendar year); (6) promptly upon their becoming publicly available,
2
one copy of each financial statement, report, notice or definitive proxy
statement sent by any Obligor to shareholders generally, and of each
regular or periodic report and any registration statement, prospectus or
written communication (other than transmittal letters) in respect thereof
filed by any Obligor with, or received by any Obligor in connection
therewith from, any securities exchange or the Securities and Exchange
Commission or any successor agency; and (7) such other information
relating to the financial condition, operations, prospects or business of
any Obligor as from time to time may be reasonably requested by Lender.
Each delivery of a financial statement pursuant to this Paragraph shall
constitute a republication of the representations and warranties contained
in PARAGRAPH 5.
(f) PARAGRAPH 6(C) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(c) Borrower shall have and maintain:
(1) a Fixed Charge Coverage Ratio for Borrower and its
Subsidiaries of not less than 1.10 to 1.00 at all times.
(2) a Tangible Net Worth for Borrower and its Subsidiaries of
not less than $11,500,000 at all times.
(3) a ratio of current assets to current liabilities for
Borrower and its Subsidiaries of not less than 1.25 to 1.00 at all
times.
(4) EBITDA for Borrower and its Subsidiaries (i) for the six
(6) calendar month period ending on March 31, 1999, of not less than
$250,000, (ii) for the nine (9) calendar month period ending on June
30, 1999, of not less than$550,000, (iii) for the twelve (12)
calendar month period ending on September 30, 1999 and for each
twelve (12) calendar month period ending on any calculation date
thereafter, of not less than $1,000,000.
(g) EXHIBIT C to the Loan Agreement is hereby amended to be identical to
EXHIBIT A attached hereto.
SECTION 3. MODIFICATION OF NOTE. On and after the Amendment Effective
Date:
(a) PARAGRAPH 3(B) of the Note is hereby amended to read in its entirety
as follows:
(b) The principal of this note shall be due and payable (i) in equal
monthly installments, each in the amount of $41,070.00, the first such
installment to be due and payable on March 1, 1999 and a like installment
to be due and payable on the last day of each calendar month thereafter
before January 31, 2001 and (ii) on January 31, 2001, when the entire
unpaid principal balance of this note, together with all accrued and
unpaid interest hereon, shall be finally due and payable.
3
(b) PARAGRAPH 13 of the Note is hereby deleted in its entirety.
SECTION 4. LIMITATIONS. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Loan Agreement or any of
the other Credit Documents, or (b) except as expressly set forth herein,
prejudice any right or rights which the Lender may now have or may have in the
future under or in connection with the Loan Agreement, the Credit Documents or
any of the other documents referred to therein. Except as expressly modified
hereby or by express written amendments thereof, the terms and provisions of the
Loan Agreement, the Notes, and any other Credit Documents or any other documents
or instruments executed in connection with any of the foregoing are and shall
remain in full force and effect. In the event of a conflict between this
Amendment and any of the foregoing documents, the terms of this Amendment shall
be controlling. The representations and warranties made in each Credit Document
are true and correct in all material respects on and as of the Amendment
Effective Date.
SECTION 5. PAYMENT OF EXPENSES. The Borrower agrees, whether or not the
transactions hereby contemplated shall be consummated, to reimburse and save the
Lender harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this Amendment,
including, without limitation, the reasonable fees and expenses of any local or
other counsel for the Lender, and all stamp taxes (including interest and
penalties, if any), recording taxes and fees, filing taxes and fees, and other
charges which may be payable in respect of, or in respect of any modification
of, the Loan Agreement and the other Credit Documents. The provisions of this
Section shall survive the termination of the Loan Agreement and the repayment of
the Loans.
SECTION 6. GOVERNING LAW. This Amendment and the rights and obligations of
the parties hereunder and under the Loan Agreement shall be construed in
accordance with and be governed by the laws of the State of Texas and the United
States of America.
SECTION 7. DESCRIPTIVE HEADINGS, ETC. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
SECTION 8. ENTIRE AGREEMENT. This Amendment and the documents referred to
herein represent the entire understanding of the parties hereto regarding the
subject matter hereof and supersede all prior and contemporaneous oral and
written agreements of the parties hereto with respect to the subject matter
hereof, including, without limitation, any commitment letters regarding the
transactions contemplated by this Amendment.
4
SECTION 9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts and all of such
counterparts shall together constitute one and the same instrument.
SECTION 10. AMENDED DEFINITIONS. As used in the Loan Agreement (including
all Exhibits thereto) and all other instruments and documents executed in
connection therewith, on and subsequent to the Amendment Effective Date the term
(i) "Agreement" shall mean the Loan Agreement as amended by this Amendment, and
(ii) references to any and all other Credit Documents shall mean such documents
as amended as contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized offices as of
the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER CREDIT DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND 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.
▇▇▇▇▇ SYSTEMS, INC.,
a Texas corporation
By: /s/ ▇.▇. ▇▇▇▇▇, ▇▇.
Name: ▇.▇. ▇▇▇▇▇, ▇▇.
Title: PRESIDENT
5
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, a national banking
association
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT
6
The undersigned hereby join in the execution of this Amendment to evidence
their consent hereto and their acknowledgment that the Credit Documents executed
by the undersigned shall continue to apply to the Loan Agreement, as amended
hereby.
CHEM-WAY SYSTEMS, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
WAY ENERGY SYSTEMS, INC.,
a Delaware corporation
By: /s/ ▇.▇. ▇▇▇▇▇, ▇▇.
Name: ▇.▇. ▇▇▇▇▇, ▇▇.
Title: PRESIDENT
DIAMOND MINI MART, INC.,
a Texas corporation
By: /s/ ▇.▇. ▇▇▇▇▇, ▇▇.
Name ▇.▇. ▇▇▇▇▇, ▇▇.
Title: PRESIDENT
EDCO, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
7
▇▇▇▇▇ OIL COMPANY, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
EDCO ENVIRONMENTAL SYSTEMS, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
IN & OUT MINI MART, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
8
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that [he] [she] is the
______________________________ of ▇▇▇▇▇ SYSTEMS, INC., a Texas corporation
("BORROWER"), and that as such is authorized to execute this certificate on
behalf of Borrower pursuant to the Loan Agreement (the "LOAN AGREEMENT") dated
as of August 30, 1996 by and between Borrower and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION; and that a review of Borrower and its Subsidiaries has been made
under [his] [her] supervision with a view to determining whether Borrower and
its Subsidiaries have fulfilled all of their respective obligations under the
Loan Agreement and the other Credit Documents; and on behalf of Borrower further
certifies, represents and warrants as follows (each capitalized term used herein
having the same meaning given to it in the Loan Agreement unless otherwise
specified):
(a) Each Obligor has fulfilled its respective obligations under the
Credit Documents.
(b) The representations and warranties made in each Credit Document
are true and correct in all respects on and as of the time of delivery
hereof, with the same force and effect as if made on and as of the time of
delivery hereof.
(c) The financial statements delivered to Lender concurrently with
this Compliance Certificate have been prepared in accordance with GAAP
consistently followed throughout the period indicated and fairly present
the financial condition and results of operations of the applicable
Persons as at the end of, and for, the period indicated.
(d) No Default has occurred and is continuing. In this regard, the
compliance with the provisions of SECTION 6(C) of the Loan Agreement is as
follows:
SECTION 6(C)(1) -- FIXED CHARGE RATIO (applicable only on or after October
1, 1997)
actual Fixed Charge Ratio for Borrower and its Subsidiaries as of
the date hereof:
__.____ : 1.00
required Fixed Charge Ratio for Borrower and its Subsidiaries as of
the date hereof:
1.10 : 1.00
SECTION 6(C)(2) -- TANGIBLE NET WORTH
actual Tangible Net Worth for Borrower and its Subsidiaries as of
the date hereof:
$_______________
EXHIBIT A
required Tangible Net Worth for Borrower and its Subsidiaries as of
the date hereof:
$11,500,000
SECTION 6(C)(3) -- WORKING CAPITAL RATIO
actual ratio of current assets to current liabilities for Borrower
and its Subsidiaries as of the date hereof:
__.____ : 1.00
required ratio of current assets to current liabilities for
Borrower and its Subsidiaries as of the date hereof:
1.25 : 1.00
SECTION 6(C)(4) -- EBITDA
actual EBITDA for Borrower and its Subsidiaries for the twelve
calendar month period ending on the date hereof:
$__________________
required EBITDA for Borrower and its Subsidiaries for the twelve
calendar month period ending on the date hereof:
$1,000,000
(e) There has occurred no material adverse change in the assets,
liabilities, financial condition, business or affairs of any Obligor since
the date of the Loan Agreement.
EXHIBIT A
2
DATED as of ____________, 199____.
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING
CERTIFICATE]
EXHIBIT A
3
