1
EXHIBIT 10.13
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
AMONG
SEPCO INDUSTRIES, INC.
AS BORROWER
AND
BARCLAYS BUSINESS CREDIT, INC.
AS LENDER
APRIL 1, 1994
2
TABLE OF CONTENTS
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i)
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1
GENERAL DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2. Accounting and Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3. Certain Matters of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2
CREDIT FACILITY
2.1. Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.3. All Loans to Constitute One Obligation . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4. Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3
INTEREST, FEES, TERM AND REPAYMENT
3.1. Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2. Unused Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3. Term of Agreement; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5. Application of Payments and Collections . . . . . . . . . . . . . . . . . . . . . . . . .
3.6. Statements of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4
COLLATERAL: GENERAL TERMS
4.1. Security Interest in Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2. Lien on Realty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3. Pledge of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4. Lien Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5. Location of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.6. Insurance of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.7. Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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SECTION 5
PROVISIONS RELATING TO ACCOUNTS
5.1. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . .
5.2. Assignments, Records and Schedules of Accounts . . . . . . . . . . . . . . . . . . . . . .
5.3. Administration of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4. Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6
PROVISIONS RELATING TO INVENTORY
6.1. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . .
6.2. Inventory Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3. Returns of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 7
PROVISIONS RELATING TO EQUIPMENT
7.1. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . .
7.2. Dispositions of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8
REPRESENTATIONS AND WARRANTIES
8.1. General Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2. Reaffirmation and Survival of Representations and Warranties . . . . . . . . . . . . . . .
SECTION 9
COVENANTS AND CONTINUING AGREEMENTS
9.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3. Specific Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10
CONDITIONS PRECEDENT
10.1. Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.2. Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 11
EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.2. Acceleration of the Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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11.3. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.4. Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 12
MISCELLANEOUS
12.1. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.2. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.3. Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.4. Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.5. Indulgences Not Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.7. Successors and Assigns; Participations by Lender . . . . . . . . . . . . . . . . . . . . .
12.8. Cumulative Effect; Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.9. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.10. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.11. Lender's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.12. Demand Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.13. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.14. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.15. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.16. Nonapplicability of Article 5069-15.01 et. seq. . . . . . . . . . . . . . . . . . . . . .
12.17. No Preservation or Marshalling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.18. Governing Law; Consent To Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.19. Waivers By Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.20. Special Louisiana Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.21. Oral Agreements Ineffective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS:
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EXHIBIT A Form of Secured Promissory Note (Term Loan)
EXHIBIT B Borrower's Business Locations
EXHIBIT C Corporate Names
EXHIBIT D Litigation
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Existing Indebtedness
EXHIBIT G Real Property
EXHIBIT H Form of Legal Opinion
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SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made
effective as of the 1st day of April, 1994, by and between BARCLAYS BUSINESS
CREDIT, INC. ("Lender"), a Connecticut corporation with an office at 2711 North
▇▇▇▇▇▇▇, Suite 2100, LB 21, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and SEPCO INDUSTRIES, INC., a
Texas corporation ("Borrower"), with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Southern Engine & Pump Company, a Delaware corporation
("SE&P"), Wesco Equipment, Inc., a Delaware corporation ("Wesco"), and Lender
have entered into that certain General Loan and Security Agreement dated
February 10, 1986 as heretofore amended by amendments dated as of December 19,
1988, and December 31, 1990 (as amended, the "Prior Loan Agreement"); and
WHEREAS, SE&P, Wesco, and Lender have entered into that certain
Amended and Restated Loan and Security Agreement dated January 22, 1992 (the
"Prior Restated SE&P Loan Agreement"); and
WHEREAS, ▇.▇. ▇▇▇▇▇▇ Bearing Co. ("TLW") and Lender have entered into
that certain Loan and Security Agreement dated January 22, 1992 (the "Prior TLW
Loan Agreement"); and
WHEREAS, pursuant to that certain Plan and Agreement of Merger - Wesco
Equipment, Inc. Into Southern Engine & Pump Company, dated as of March 1, 1994,
Wesco and SE&P agreed that Wesco and SE&P would be merged into a single
corporation, by Wesco merging into and with SE&P, with SE&P being the surviving
corporation, to exist by virtue of and be governed by the laws of the State of
Delaware; and
WHEREAS, pursuant to that certain Plan and Agreement of Merger -
Southern Engine & Pump Company Into Sepco Industries, Inc., dated as of March
1, 1994, SE&P and Borrower agreed that SE&P and Borrower would be merged into a
single corporation, by SE&P merging into and with Borrower, with Borrower being
the surviving corporation, to exist by virtue of and be governed by the laws of
the State of Texas; and
WHEREAS, pursuant to that certain Plan and Agreement of Merger - ▇.▇.
▇▇▇▇▇▇ Bearing Co. Into DMS Corporation, dated as of ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇ and DMS
Corporation, a Texas corporation ("DMS"), agreed that TLW and DMS would be
merged into a single corporation, by TLW merging into and with DMS, with DMS
being the surviving corporation, to exist by virtue of and be governed by the
laws of the State of Texas; and
WHEREAS, pursuant to that certain Plan and Agreement of Merger - DMS
Corporation Into Sepco Industries, Inc., dated as of March 1, 1994, DMS and
Borrower agreed that DMS and Borrower would be merged into a single
corporation, by DMS merging into and with Borrower,
LOAN AND SECURITY AGREEMENT - Page 1
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with Borrower being the surviving corporation, to exist by virtue of and be
governed by the laws of the State of Texas; and
WHEREAS, Borrower and Lender now desire to consolidate, amend and
restate in their entirety the Prior Restated SE&P Loan Agreement and the TLW
Loan Agreement.
NOW, THEREFORE, in consideration of the premises and other value, the
receipt and sufficiency of which are hereby acknowledged, Borrower and Lender
agree as follows:
SECTION 1. GENERAL DEFINITIONS
1.1. Defined Terms. When used herein, the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower
or in which Borrower now has or hereafter acquires any interest.
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Adjusted Net Earnings From Operations- with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes for
such fiscal period of Borrower, all as reflected on the financial statement of
Borrower supplied to Lender pursuant to Section 9.1(J) hereof, but excluding:
(a) any gain or loss arising from the sale of capital assets; (b) any gain
arising from any write-up of assets; (c) earnings of any Subsidiary accrued
prior to the date it became a Subsidiary; (d) earnings of any corporation,
substantially all the assets of which have been acquired in any manner by
Borrower, realized by such corporation prior to the date of such acquisition;
(e) net earnings of any business entity (other than a Subsidiary) in which
Borrower has an ownership interest unless such net earnings shall have actually
been received by Borrower in the form of cash distributions; (f) any portion of
the net earnings of any Subsidiary which for any reason is unavailable for
payment of dividends to Borrower; (g) the earnings of any Person to which any
assets of Borrower shall have been sold, transferred or disposed of, or into
which Borrower shall have merged, or been a party to any consolidation or other
form of reorganization, prior to the date of such transaction; (h) any gain
arising from the acquisition of any Securities of Borrower; and (i) any gain
arising from extraordinary or non-recurring items.
Adjusted Tangible Assets - all assets except: (a) deferred assets,
other than prepaid insurance and prepaid taxes; (b) patents, copyrights,
trademarks, trade names, non-compete agreements, franchises and other similar
intangibles; (c) good will; (d) Restricted Investments; (e) unamortized debt
discount and expense; (f) assets located and notes and receivables due from
obligors outside of the United States of America; and (g) Accounts, notes and
other receivables due from Affiliates or employees.
LOAN AND SECURITY AGREEMENT - Page 2
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Adjusted Tangible Net Worth - at any date means a sum equal to: (a)
the net book value (after deducting related depreciation, obsolescence,
amortization, valuation, and other proper reserves) at which the Adjusted
Tangible Assets of a Person would be shown on a balance sheet at such date in
accordance with GAAP, less (b) the amount at which such Person's liabilities
(other than capital stock and surplus) would be shown on such balance sheet in
accordance with GAAP, plus (c) Subordinated Debt.
Affiliate - a Person (other than a Subsidiary): (a) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower; (b) which beneficially owns or holds 5%
or more of any class of the voting Securities of Borrower; or (c) 5% or more of
the voting Securities (or in the case of a Person which is not a corporation,
5% or more of the equity interest) of which is beneficially owned or held by
Borrower or a Subsidiary of Borrower. For purposes hereof, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting Securities, by contract or otherwise.
Agreement - this Second Amended and Restated Loan and Security
Agreement, as amended, modified, supplemented or restated from time to time.
Annual Rate - as defined in Section 3.1(A) of this Agreement.
Applicable Margin - as defined in Section 3.1(F) of this Agreement.
Average Daily Availability - the amount obtained by adding the
difference between the Borrowing Base and the unpaid balance of Loans owing by
Borrower to Lender at the end of each day during the period in question and by
dividing such sum by the number of days in such period.
Average Monthly Loan Balance - the amount obtained by adding the
unpaid balance of Revolving Credit Loans owing by Borrower to Lender at the end
of each day for each day during the month in question and by dividing such sum
by the number of days in such month.
Bank - Barclays Bank PLC.
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its "base rate" for commercial loans, whether or not such rate is
the lowest rate charged by said bank to its most preferred borrowers; and, if
the base rate for commercial loans is discontinued by said bank as a standard,
a comparable reference rate designated by said bank as a substitute therefor
shall be the Base Rate.
Borrower - Sepco Industries, Inc., a Texas corporation, and the
surviving corporation of the mergers of SE&P into Borrower and DMS into
Borrower; SE&P being the surviving corporation of the merger of Wesco into
SE&P; and DMS being the surviving corporation of the merger of TLW into DMS.
LOAN AND SECURITY AGREEMENT - Page 3
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Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) Twenty Million Dollars ($20,000,000), minus the
unpaid principal balance of the Term Loan at such date; or
(b) an amount equal to:
(i) 85% of the net amount of Eligible
Accounts outstanding at such date (as determined by
Lender in its sole discretion);
PLUS
(ii) the lesser of (A) Nine Million
Dollars ($9,000,000) or (B) 50% of the value of
Eligible Inventory (as determined by Lender in its
sole discretion) at such date consisting of finished
goods, calculated on the basis of the lower of cost
or fair market value (as determined by Lender in its
sole discretion) with the cost of finished goods
calculated on a first-in, first-out basis;
MINUS (subtract from the sum of clauses (i) and (ii)
above)
(iii) an amount equal to the sum of (A)
the face amount of all LC Guaranties and Letters of
Credit issued by Lender or Affiliates of Lender and
outstanding at such date and (B) any amounts which
Lender may be obligated to pay in the future for the
account of Borrower pursuant to this Agreement, the
Other Agreements or otherwise.
For purposes hereof, the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts less any and all returns,
rebates, discounts, (which may, at Lender's option, be calculated on shortest
terms), credits, allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time.
Business Day - a day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Texas or is a day on which banking
institutions in such state are closed.
Capital Expenditures - expenditures made and liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the direct or indirect acquisition of such assets by way of
increased product or service charges, offset items or otherwise and the
principal portion of payments with respect to capitalized lease obligations.
LOAN AND SECURITY AGREEMENT - Page 4
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Cash Flow - with respect to any fiscal period, means the Adjusted Net
Earnings From Operations of Borrower for such period, plus non-cash charges in
respect to depreciation and amortization for such period minus Capital
Expenditures made during such period, minus scheduled principal payments on
Indebtedness for such period.
Closing Date - the date on which all of the conditions precedent in
Section 10 are satisfied and the initial Loan is made hereunder.
Code - the Uniform Commercial Code as adopted and in force in the State
of Texas, as from time to time in effect.
Collateral - all of the Property and interests in Property described
in Section 4 hereof, and all other Property and interests in Property that now
or hereafter secure the payment and performance of any of the Obligations.
Commitment - Twenty Million Dollars ($20,000,000.00).
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets on a
balance sheet at such date in accordance with GAAP except that amounts due from
Affiliates and investments in Affiliates shall be excluded there from.
Current Liabilities - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP excluding
the Loans and current maturities of any long-term indebtedness.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in Section 3.1(A) of this Agreement.
Distribution - in respect of any corporation means and_includes: (a)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (b) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds
of the sale of Securities.
Dominion Account - a special account of Borrower established by
Borrower pursuant to this Agreement at a bank selected by Borrower, but
acceptable to Lender, in its sole discretion, and over which Lender shall have
sole and exclusive access and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition or services which
Lender, in its credit judgment, deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an Eligible
Account if:
LOAN AND SECURITY AGREEMENT - Page 5
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(a) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower; or
(b) it is unpaid for more than 60 days after the original
due date shown on the invoice; or
(c) it is due or unpaid more than 90 days after the
original invoice date; or
(d) 20% or more of the Accounts from the Account Debtor
are not deemed Eligible Accounts hereunder; or
(e) the total unpaid Accounts of the Account Debtor
exceed 25% of the net amount of all Accounts, to the extent of such
excess; or
(f) any covenant, representation or warranty contained in
this Agreement with respect to such Account has been breached; or
(g) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect to
such Account, or the Account Debtor has made any claim with respect to
any other Account due from such Account Debtor to Borrower, or the
Account otherwise is or may become subject to any right of setoff by
the Account Debtor; or
(h) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or if the Account Debtor has ceased to be
Solvent or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion
of its assets or affairs; or
(i) it arises from a sale to an Account Debtor outside
the United States; or
(j) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(k) Lender in good faith believes that collection of such
Account is insecure or that payment thereof is doubtful or will be
delayed by reason of the Account Debtor's financial condition; or
(l) the Account Debtor is the United States of America or
any department, agency or instrumentality thereof; or
LOAN AND SECURITY AGREEMENT - Page 6
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(m) the Account Debtor is located in the State of New
Jersey or Minnesota, unless Borrower has filed a Notice of Business
Activities Report with the appropriate officials in those states for
the then current year; or
(n) the Account is subject to a Lien other than a
Permitted Lien; or
(o) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and accepted
by the Account Debtor or the Account otherwise does not represent a
final sale; or
(p) the total unpaid Accounts of the Account Debtor
exceed a credit limit determined by Lender, to the extent such Account
exceeds such limit; or
(q) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(r) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt payment
and which discounts or allowances are reflected in the calculation of
the face value of each invoice related to such Account; or
(s) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof; or
(t) the Account arises from a retail sale of goods to a
Person who is purchasing same primarily for personal, family or
household purposes.
Eligible Inventory - such Inventory of Borrower which Lender, in its
credit judgment, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory unless,
in Lender's good faith opinion, it
(a) is raw materials or finished goods,
(b) is in good, new and saleable condition,
(c) is not obsolete or unmerchantable,
(d) has been owned by Borrower for not more than twelve
months,
(e) meets all standards imposed by any governmental
agency or authority,
(f) conforms in all respects to the warranties and
representations set forth in Section 6.1 hereof,
LOAN AND SECURITY AGREEMENT - Page 7
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(g) is at all times subject to Lender's duly perfected,
first priority security interest and no other Lien except a Permitted
Lien, and
(h) is situated at a location in compliance with Section
4.5 hereof and is not in transit.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or
hereafter acquired and wherever located, and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, and all
rules and regulations from time to time promulgated thereunder.
Excess - as defined in Section 3.1(C) of this Agreement.
Event of Default - as defined in Section 11.1 of this Agreement.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Intangibles - all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer programs, all
claims under guaranties, security interests or other security held by or
granted to Borrower to secure payment of any of the Accounts by an Account
Debtor, all rights to indemnification and all other intangible property of
every kind and nature (other than Accounts).
Guarantors - ▇▇▇▇▇ ▇▇▇▇▇▇, Southern Engine & Pump Company (formerly
known as Sepco Compression Services, Inc.), ▇.▇. ▇▇▇▇▇▇ Bearing Co. (formerly
known as Sepco Power Products, Inc.) and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the Obligations.
Guaranty Agreements - the Continuing Guaranty Agreements which are to
be executed by Guarantors in form and substance satisfactory to Lender.
LOAN AND SECURITY AGREEMENT - Page 8
13
Indebtedness - as applied to a Person means, without duplication (i)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including, without
limitation, capitalized lease obligations, (ii) all obligations of other
Persons which such Person has guaranteed and (iii) in the case of Borrower
(without duplication), the Obligations.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired, and wherever located, including, but not limited to, all goods
intended for sale or lease by Borrower, or for display or demonstration; all
work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's business;
and all documents evidencing and General Intangibles relating to any of the
foregoing.
LC Guaranty - a guaranty executed by Lender at Borrower's request in
favor of a Person who has issued a Letter of Credit.
Letter of Credit - a letter of credit at any time issued for the
account of Borrower.
Leverage Ratio - at any date means the ratio of the Indebtedness of
Borrower to Adjusted Tangible Net Worth of Borrower.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 2.4 of this Agreement.
Loan Documents - this Agreement and the Other Agreements.
Loans - all loans and advances made by Lender pursuant to this
Agreement, including, without limitation, all Revolving Credit Loans and the
Term Loan.
Maximum Legal Rate - as defined in Section 3.1(B) of this Agreement.
Mortgages - the mortgages and deeds of trust, and extension and
modification agreements as required by Lender with respect to presently
recorded mortgages and deeds of trust, to be executed by Borrower and/or
Guarantor on or about the Closing Date in favor of Lender and by which Borrower
and/or Guarantor shall grant and convey to Lender, as security for the
Obligations, a first priority Lien upon all real Property of Borrower wherever
located and that real Property described in Exhibit G hereto.
LOAN AND SECURITY AGREEMENT - Page 9
14
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrower
to Lender of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, whether arising under this Agreement or
any of the Other Agreements or otherwise, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising and however acquired.
The term includes, without limitation, all interest, charges, expenses, fees,
attorney's fees and any other sums chargeable to Borrower under this Agreement
or any of the Other Agreements.
Original Term - as defined in Section 3.3(A) of this Agreement.
Other Agreements - any and all agreements, instruments and documents
heretofore, now or hereafter executed by Borrower or Guarantors, as the case
may be, and delivered to Lender in respect to the transactions contemplated by
this Agreement, including, without limitation, the Term Note, the Shareholder
Pledge Agreement, the Guaranty Agreements and the Mortgages.
Overadvance - as defined in Section 2.1 of this Agreement.
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in this Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subparagraphs (i)
through (viii) of Section 9.2(E) of this Agreement.
Person - an individual, partnership, corporation, joint stock company,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Prohibited Transaction - any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986.
Projections - Borrower's forecasted (a) balance sheets, (b) profit and
loss statements, (c) cash flow statements, and (d) capitalization statements,
all prepared on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Lien - a Lien upon fixed assets granted by Borrower to
secure Indebtedness incurred by Borrower to purchase such fixed assets.
LOAN AND SECURITY AGREEMENT - Page 10
15
Renewal Terms - as defined in Section 3.3(A) of this Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Restricted Investment - any investment in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following: (a) investments in one or
more Subsidiaries of Borrower; (b) Property to be used in the ordinary course
of business; (c) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower; (d) investments in direct
obligations of the United States of America, or any agency thereof or
obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (e)
investments in certificates of deposit maturing within one year from the date
of acquisition issued by a bank or trust company organized under the laws of
the United States or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000; and (f) investments in commercial
paper given the highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in Section
2.1 of this Agreement.
Schedule of Accounts - as defined in Section 5.2 of this Agreement.
Security - shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
Shareholder Pledge Agreement - the Pledge Agreement to be executed by
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee, in form and substance acceptable to Lender, by which
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee, grant to Lender a first priority security interest in
and to approximately 53% of all of the common stock of Borrower.
Solvent - as to any Person, such Person (a) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (b) is able to pay all of its
Indebtedness as such Indebtedness matures, and (c) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower to whose existence Lender
has consented in writing and that is subordinated to the Obligations pursuant
to a written agreement acceptable to Lender in all respects as to both form and
substance.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the voting
Securities at the time of determination.
LOAN AND SECURITY AGREEMENT - Page 11
16
Term Loan - the Loan described in Section 2.2 of this Agreement.
Term Note - the Secured Promissory Note to be executed by Borrower on
or about the Closing Date in favor of Lender to evidence the Term Loan, which
shall be in the form of Exhibit A attached hereto.
Working Capital - at any date means Current Assets minus Current
Liabilities.
1.2. Accounting and Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with that applied in preparation of the financial statements
referred to in Section 9.1(J), and all financial data pursuant to the Agreement
shall be prepared in accordance with such principles. All other terms
contained in this Agreement shall have, when the context so indicates, the
meanings provided for by the Code to the extent the same are used or defined
therein.
1.3. Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. The section titles, table of
contents and list of exhibits appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instruments or agreements,
including, without limitation, references to this Agreement or any of the Other
Agreements, shall include any and all modifications or amendments thereto and
any and all extensions or renewals thereof.
SECTION 2. CREDIT FACILITY
2.1. Revolving Credit Loans. Subject to the terms and conditions
of this Agreement, Lender agrees to make Revolving Credit Loans to Borrower
from time to time, in amounts determined by Lender in its sole discretion, up
to a maximum principal amount at any time outstanding equal to the Borrowing
Base at such time. If the unpaid balance of the Revolving Credit Loans should
exceed the Borrowing Base or any other limitation set forth in this Agreement,
such Revolving Credit Loans shall nevertheless constitute Obligations that are
secured by the Collateral and entitled to all benefits thereof. Insofar as
Borrower may request and Lender may be willing in its sole and absolute
discretion to make Revolving Credit Loans to Borrower at a time when the unpaid
balance of Revolving Credit Loans exceeds, or would exceed with the making of
any such Revolving Credit Loan, the Borrowing Base (any such Loan or Loans
being herein referred to individually as an "Overadvance" and collectively as
"Overadvances"), Lender shall enter such Overadvances as debits in the Loan
Account. All Overadvances shall be payable ON DEMAND, shall be secured by the
Collateral and shall bear interest as provided herein for Revolving Credit
Loans generally. The Revolving Credit Loans shall be used solely for the
satisfaction of existing Indebtedness of Borrower to and for Borrower's general
operating capital needs to the extent not inconsistent with the provisions of
this Agreement.
LOAN AND SECURITY AGREEMENT - Page 12
17
2.2. Term Loan. Subject to the terms and conditions of this
Agreement, Lender agrees to make a term loan to Borrower in the principal
amount of $1,329,277.37. The Term Loan shall be repayable in accordance with
the terms of the Term Note and shall be secured by the Collateral. The
proceeds of the Term Loan shall be used by Borrower for the purpose of
consolidating and refinancing, in Borrower's name, (a) that certain promissory
note in the original principal sum of $2,000,000, executed by SE&P, payable to
the order of Lender, the proceeds of which were used by SE&P for paying for
costs associated with SE&P's building expansion project in New Orleans,
Louisiana and for working capital purposes, and (b) that certain promissory
note in the original principal sum of $500,000, executed by TLW, payable to the
order of Lender, the proceeds of which were used by TLW for the purpose of
refinancing existing term indebtedness owing to Marine Midland Business Credit,
Inc., First National Bank of ▇▇▇▇▇▇▇▇▇▇, Texas and certain other lenders or to
provide working capital for TLW in the ordinary course of business. If
Borrower sells any of the Equipment or real Property, or if any of the
Collateral is taken by condemnation, Borrower shall pay to Lender, unless
otherwise agreed by Lender, as and when received by Borrower and as a mandatory
prepayment of the Term Loan (or, at Lender's option, such of the other
Obligations as Lender may elect), a sum equal to the proceeds received by
Borrower from such sale or condemnation less any state or federal income tax
directly attributable thereto.
2.3. All Loans to Constitute One Obligation. All Loans shall
constitute one general obligation of Borrower, and shall be secured by Lender's
security interest in and Lien upon all of the Collateral, and by all other
security interests and Liens heretofore, now or at any time or times hereafter
granted by Borrower to Lender.
2.4. Loan Account. Lender shall enter all Loans as debits to the
Loan Account and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Lender, and may record therein, in accordance with customary accounting
practice, all charges and expenses properly chargeable to Borrower and any
other Obligation.
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT
3.1. Interest and Charges.
(A) Interest shall accrue on the Term Loan in accordance
with the terms of the Term Note and, subject to Section 3.1(F), shall accrue on
the principal amount of the Revolving Credit Loans outstanding at the end of
each day at the lesser of (i) a fluctuating rate per annum equal to the
Applicable Margin (determined in accordance with Section 3.1(F) hereof) above
the Base Rate (the "Annual Rate") or (ii) the Maximum Legal Rate. After the
date hereof, the Annual Rate shall be increased or decreased, as the case may
be, by an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective. The Base Rate in effect on the
date hereof shall be the Base Rate effective as of the opening of business on
the date hereof, but if this Agreement is executed on a day that is not a
Business Day, the Base Rate in effect on the date hereof shall be the Base Rate
effective as of the opening of business on the last
LOAN AND SECURITY AGREEMENT - Page 13
18
Business Day immediately preceding the date hereof. Interest shall be
calculated on a daily basis (computed on the actual number of days elapsed over
a year of 360 days), commencing on the date hereof, and shall be payable
monthly, in arrears, on the first day of each month; provided, however, that
interest at the Maximum Legal Rate shall be computed on the actual number of
days elapsed over a year of 365 or 366 days, as the case may be. Upon and
after the occurrence of an Event of Default, and during the continuation
thereof, the principal amount of the Obligations shall bear interest at the
lesser of (i) the Maximum Legal Rate or (ii) a fluctuating rate per annum,
calculated daily (computed on the actual days elapsed over a year of 360 days),
equal to 4.0% above the Base Rate (the "Default Rate").
(B) Notwithstanding the foregoing or any other provision
in this Agreement, (i) if at any time the amount of interest computed on the
basis of the Annual Rate or the Default Rate would exceed the amount of such
interest computed upon the basis of the maximum rate of interest permitted by
applicable state or federal law in effect from time to time hereafter (the
"Maximum Legal Rate"), the interest payable under this Agreement shall be
computed upon the basis of the Maximum Legal Rate, but any subsequent reduction
in the Annual Rate or Default Rate, as applicable, shall not reduce such
interest thereafter payable hereunder below the amount computed on the basis of
the Maximum Legal Rate until the aggregate amount of such interest accrued and
payable under this Agreement equals the total amount of interest which would
have accrued if such interest had been at all times computed solely on the
basis of the Annual Rate or Default Rate, as applicable; and (ii) unless
preempted by federal law, the Annual Rate or Default Rate, as applicable, from
time to time in effect hereunder may not exceed the "indicated ceiling rate"
from time to time in effect under Tex. Rev. Civ. Stat. ▇▇▇. art 5069-1.04(c)
(▇▇▇▇▇▇ 1987).
(C) No agreements, conditions, provisions or stipulations
contained in this Agreement or any other instrument, document or agreement
between Borrower and Lender or default of Borrower, or the exercise by Lender
of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in this Agreement or
any other agreement between Borrower and Lender, or the arising of any
contingency whatsoever, shall entitle Lender to contract for, charge, or
receive, in any event, interest exceeding the Maximum Legal Rate. In no event
shall Borrower be obligated to pay interest exceeding such Maximum Legal Rate
and all agreements, conditions or stipulations, if any, which may in any event
or contingency whatsoever operate to bind, obligate or compel Borrower to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is contracted
for, charged or received in excess of the Maximum Legal Rate ("Excess"),
Borrower acknowledges and stipulates that any such contract, charge, or receipt
shall be the result of an accident and bona fide error, and that any Excess
received by Lender shall be applied, first, to reduce the principal then unpaid
hereunder; second, to reduce the other Obligations; and third, returned to
Borrower, it being the intention of the parties hereto not to enter at any time
into a usurious or otherwise illegal relationship. Borrower recognizes that,
with fluctuations in the Base Rate and the Maximum Legal Rate, such a result
could inadvertently occur. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Lender,
LOAN AND SECURITY AGREEMENT - Page 14
19
based in whole or in part upon contracting for, charging or receiving of any
interest in excess of the maximum authorized by applicable law. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Lender, all interest at any time contracted for, charged
or received by Lender in connection with this Agreement shall be amortized,
prorated, allocated and spread in equal parts during the entire term of this
Agreement.
(D) The provisions of Section 3.1(C) shall be deemed to
be incorporated into every document or communication relating to the
Obligations which sets forth or prescribes any account, right or claim or
alleged account, right or claim of Lender with respect to Borrower (or any
other obligor in respect of Obligations), whether or not any provision of
Section 3.1 is referred to therein. All such documents and communications and
all figures set forth therein shall, for the sole purpose of computing the
extent of the Obligations and obligations of the Borrower (or other obligor)
asserted by Lender thereunder, be automatically recomputed by Borrower or
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by Section 3.1(C).
(E) If the applicable state or federal law is amended in
the future to allow a greater rate of interest to be charged under this
Agreement or the Other Agreements than is presently allowed by applicable state
or federal law, then the limitation of interest hereunder shall be increased to
the maximum rate of interest allowed by applicable state or federal law as
amended, which increase shall be effective hereunder on the effective date of
such amendment, and all interest charges owing to Lender by reason thereof
shall be payable upon demand.
(F) "Applicable Margin" initially shall mean 1.00%.
Thereafter, the Applicable Margin shall be adjusted upward on a monthly basis
as follows:
(i) Commencing with June, 1994, if the Average Daily
Availability is $1,500,000 or less for any month (the "Test Month"),
the Applicable Margin for the month immediately succeeding the Test
Month will equal 1.75%; and
(ii) Commencing with June, 1994, if the Average Daily
Availability is less than $2,000,000 but greater than $1,500,000 for
any Test Month, the Applicable Margin for the month immediately
succeeding the Test Month will equal 1.50%.
3.2. Unused Facility Fee. From the date hereof, Borrower agrees to
pay to Lender a quarterly unused facility fee, equal to one-quarter percent
(0.25%) per annum of the average daily unused portion of the Commitment,
payable quarterly in arrears, the first payment being due on July l, 1994 and
continuing on the first day of each July, October, January and April thereafter
during the term of this Agreement and upon the termination hereof. The first
payment due on July 1, 1994 shall include also payment to Lender of the unused
facility fees, if any, that accrued pursuant to the terms of the Prior Restated
SE&P Loan Agreement and the Prior TLW Loan Agreement during the period
beginning April 1, 1994 and ending May 31, 1994.
LOAN AND SECURITY AGREEMENT - Page 15
20
3.3. Term of Agreement; Termination.
(A) Subject to Lender's right to cease making Loans to
Borrower at any time upon or after the occurrence of a default or an Event of
Default, the provisions of this Agreement shall be in effect for a period from
the date hereof, through and including January 2, 1997 (the "Original Term").
Upon written request by Borrower, Lender may, in its sole and absolute
discretion, renew this Agreement for any number of successive one year periods
thereafter (a "Renewal Term"), but Lender shall have no obligation to do so.
(B) Upon at least 90 days prior written notice to Lender,
Borrower may, at its option, terminate this Agreement; provided, however, no
such termination shall be effective until Borrower has paid all of the
Obligations in immediately available funds. It is understood that Borrower may
elect to terminate this Agreement in its entirety only; no section or lending
facility may be terminated singly.
(C) At the effective date of any such termination by
Borrower, Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other charges owing under this Agreement and
any of the Other Agreements), as liquidated damages for the loss of the bargain
and not as a penalty, an amount equal to 0.5% of the highest of the Average
Monthly Loan Balances outstanding pursuant to Section 2.1 during the twelve
month period ending on the date of termination if termination occurs at any
time prior to January 2, 1997 or during any Renewal Term thereafter. If
termination occurs on the last day of the Original Term or the last day of any
Renewal Term, no termination charge shall be payable.
(D) All of the Obligations shall be forthwith due and
payable upon any termination of this Agreement. Except as otherwise expressly
provided in this Agreement or any of the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or any of the
Other Agreements shall in any way affect or impair the rights, powers or
privileges of Lender or the obligations or liabilities of Borrower in any way
relating to (i) any transaction or event occurring prior to such termination or
cancellation or (ii) any of the undertakings, agreements, covenants, warranties
or representations of Borrower contained in this Agreement or any of the Other
Agreements. All such undertakings, agreements, covenants, warranties and
representations of Borrower shall survive such termination or cancellation,
and, notwithstanding such termination or cancellation, Lender shall retain its
Liens in the Collateral and all of its rights and remedies under this Agreement
and the Other Agreements until Borrower has paid the Obligations to Lender, in
full, in immediately available funds.
3.4. Payments. Principal and interest on the Term Loan shall be
payable as provided in the Term Note. Except where evidenced by notes or other
instruments issued or made by Borrower to Lender specifically containing
payment provisions which are in conflict with this Section 3.4 (in which event
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
(A) Principal payable on account of Revolving Credit
Loans made by Lender to Borrower, shall be payable by Borrower to Lender
immediately upon the earliest of (i) the
LOAN AND SECURITY AGREEMENT - Page 16
21
receipt by Lender or Borrower of any proceeds of any of the Collateral, to the
extent of said proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of
the Obligations, or (iii) termination of this Agreement; provided, however,
that if the principal balance of Revolving Credit Loans outstanding at any time
shall exceed the Borrowing Base at such time, Borrower shall, on demand, repay
the Revolving Credit Loans in an amount sufficient to reduce the aggregate
unpaid principal amount of such Revolving Credit Loans by an amount equal to
such excess.
(B) Interest accrued on the Obligations shall be due on
the earliest of (i) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (ii) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement; provided, however, that Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
the Loan Account hereunder as a Revolving Credit Loan, a sum sufficient each
month to pay all interest accrued on the Obligations during the immediately
preceding month.
(C) The balance of the Obligations requiring the payment
of money, if any, shall be payable by Borrower to Lender as and when provided
in this Agreement or the Other Agreements, or on demand, whichever is earlier.
(D) All proceeds (less income taxes directly attributable
to such sale), up to a maximum amount of $300,000, received by Borrower from
the sale of its Metairie, Louisiana facility located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ shall be applied as a pre-payment of installments of
principal on the Term Note in inverse order of maturity; such prepayments will
not be subject to any prepayment penalty.
3.5. Application of Payments and Collections. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrower, and Borrower does hereby irrevocably agree that Lender shall have
the continuing exclusive right to apply and reapply any and all such payments
and collections received at any time or times hereafter by Lender or its agent
against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. If as
the result of collections of Accounts as authorized by Section 5.4 hereof a
credit balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrower, but shall be available to Borrower at any time
or times for so long as no Default or Event of Default exists. In no event
shall such credit balance be applied or be deemed to have been applied as a
prepayment of the Term Loan unless so requested by Borrower, but Lender may
offset such credit against the Obligations upon or after the occurrence of any
Event of Default.
3.6. Statements of Account. Lender will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower unless Lender is notified by Borrower in writing
to the contrary within 30 days of the date each account is
LOAN AND SECURITY AGREEMENT - Page 17
22
mailed to Borrower. Such notice shall only be deemed an objection to those
items specifically objected to therein.
SECTION 4. COLLATERAL: GENERAL TERMS
4.1. Security Interest in Collateral. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby grants to Lender
a continuing security interest in and Lien upon all of the Property and
interests in Property of Borrower, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located including, without
limitation, the following:
(A) Accounts;
(B) Inventory;
(C) Equipment;
(D) General Intangibles;
(E) all monies and other Property of any kind, now or at
any time or times hereafter, in the possession or under the control of Lender
or a bailee of Lender;
(F) all accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (A), (B), (C), (D) and
(E) above, including, without limitation, Proceeds of and unearned premiums
with respect to insurance Policies insuring any of the Collateral; and
(G) all books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (A), (B), (C), (D), (E)
or (F) above.
4.2. Lien on Realty. The due and punctual payment and performance
of the Obligations shall also be secured by the Lien created by the Mortgages
upon all real Property of Borrower described therein. Borrower shall deliver
to Lender, at Borrower's expense, mortgagee title insurance policies issued by
a title insurance company satisfactory to Lender insuring Lender as mortgagee;
such policies shall be in form and substance satisfactory to Lender and shall
insure a valid first Lien in favor of Lender on the Property covered thereby,
subject only to those exceptions acceptable to Lender and its counsel.
Borrower shall deliver to Lender such other documents, including, without
limitation, as-built survey prints of the real Property, as Lender and its
counsel may reasonably request relating to the real Property subject to the
Mortgage.
4.3. Pledge of Note. The due and punctual payment and performance
of the Obligations shall also be secured by the pledge and security interest
created by the Pledge of Note, dated as of December 2, 1992, covering that
certain promissory note in the principal
LOAN AND SECURITY AGREEMENT - Page 18
23
amount of $290,000.00, executed by Independent Supply, Inc., payable to the
order of Bearer. Borrower shall deliver to Lender the original of the note,
together with such other documents as Lender and its counsel may reasonably
request relating to the note.
4.4. Lien Perfection. Borrower agrees to execute the UCC-l
financing statements provided for by the Code or otherwise together with any
and all other instruments, assignments or documents and shall take such other
action as may be reasonably required to perfect or to continue the perfection
of Lender's security interest in the Collateral as a first priority Lien
subject to Permitted Liens only. Unless prohibited by applicable law, Borrower
hereby authorizes Lender to execute and file any such financing statement on
Borrower's behalf. The parties agree that a carbon, Photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.
4.5. Location of Collateral. All Collateral, other than Inventory
in transit, will at all times be kept by Borrower at one or more of the
business locations set forth in Exhibit B and shall not, without the prior
written approval of Lender, be moved therefrom except, prior to an Event of
Default, for sales of Inventory in the ordinary course of business and
dispositions of Equipment that are authorized by Section 7.2 hereof.
4.6. Insurance of Collateral. Borrower agrees to maintain and pay
for insurance upon all Collateral wherever located, in storage or in transit in
vehicles, including goods evidenced by documents, covering casualty, hazard,
public liability and such other risks and in such amounts and with such
insurance companies as shall be reasonably satisfactory to Lender to insure
Lender's interest in the Collateral. Borrower shall deliver the originals of
such policies to Lender with satisfactory endorsements naming Lender as loss
payee and as mortgagee pursuant to a standard mortgagee clause. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause that the
interest of Lender shall not be impaired or invalidated by any act or neglect
of Borrower or owner of the Property nor by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If Borrower fails
to provide and pay for such insurance, Lender may, at Borrower's expense,
procure the same, but shall not be required to do so. Borrower agrees to
deliver to Lender, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies.
4.7. Protection of Collateral. All insurance expenses and all
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, any and all taxes imposed by any governmental
authority on any Collateral or in respect of the sale thereof shall be borne
and paid by Borrower. If Borrower fails to promptly pay any portion thereof
when due, Lender may, at its option, but shall not be required to, pay the same
and charge the Loan Account therefor. Borrower agrees to reimburse Lender
promptly therefor with interest accruing thereon daily at the Default Rate.
All sums so paid or incurred by Lender for any of the foregoing and all
reasonable costs and expenses (including reasonable attorneys' fees, legal
expenses, and court costs) which Lender may incur in enforcing or protecting
its Lien on or rights and interest in the Collateral or any of its rights or
remedies, together with interest at the
LOAN AND SECURITY AGREEMENT - Page 19
24
Default Rate, shall be considered Obligations hereunder secured by all
Collateral. Lender shall not be liable or responsible in any way for the
safekeeping of any Collateral or for any loss or damage thereto (except for
reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act
or default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.
SECTION 5. PROVISIONS RELATING TO ACCOUNTS
5.1. Representations, Warranties and Covenants. With respect to
all Accounts, Borrower represents and warrants to Lender that Lender may rely,
in determining which Accounts are Eligible Accounts, on all statements and
representations made by Borrower with respect to any Account or Accounts, and,
unless otherwise indicated in writing to Lender, that with respect to each
Account: it is genuine and in all respects what it purports to be, and it is
not evidenced by a judgment; it arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the ordinary course
of its business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor; it is for a liquidated amount
maturing as stated in the duplicate invoice covering such sale or rendition of
services; such Account, and Lender's security interest therein, is not, and
will not be in the future, subject to any offset, Lien, deduction, defense,
dispute, counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is deemed by Lender
to be immaterial, and each such Account is absolutely owing to Borrower and is
not contingent in any respect or for any reason; Borrower has made no agreement
with any Account Debtor thereunder for any deduction therefrom, except
discounts or allowances which are granted by Borrower in the ordinary course of
its business for prompt payment and which are reflected in the calculation of
the net amount of each respective invoice related thereto; there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or tend to reduce the amount payable thereunder from the face amount of
the invoice and statements delivered to Lender with respect thereto; to the
best of Borrower's knowledge, the Account Debtor thereunder is Solvent and, at
the time any contract or other document giving rise to the Account was
executed, such Account Debtor had the capacity to contract; and Borrower has no
knowledge of any fact or circumstance which would impair the validity or
collectibility of such Account.
5.2. Assignments, Records and Schedules of Accounts. If requested
to do so by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly (or, if requested by Lender, daily),
together with copies of invoices or invoice registers related thereto.
Borrower shall keep accurate and complete records of its Accounts and all
payments and collections thereon and shall submit to Lender on a daily basis a
sales and collections report for the preceding day, in form satisfactory to
Lender. On or before the fifteenth day of each month from and after the date
hereof, Borrower shall deliver to Lender, in form satisfactory to Lender, a
detailed aged trial balance of all Accounts existing as of the last day of the
preceding month, specifying the names, addresses, face value, dates of invoices
and due dates for each Account Debtor obligated on an Account so listed
("Schedule of Accounts"),
LOAN AND SECURITY AGREEMENT - Page 20
25
and, upon Lender's request therefor, copies of proof of delivery and the
original copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so scheduled and
such other matters and information relating to the status of then existing
Accounts as Lender shall reasonably request. If any amounts due and owing in
excess of $50,000 are in dispute between Borrower and any Account Debtor,
Borrower shall provide Lender with written notice thereof at the time of
submission of the next Schedule of Accounts, explaining in detail the reason
for the dispute, all claims related thereto and the amount in controversy.
5.3. Administration of Accounts. Upon the granting of any
discounts, allowances or credits by Borrower that are not shown on the face of
the invoice for the Account involved, Borrower shall promptly report such
discounts, allowances or credits, as the case may be, to Lender and in no event
later than the time of its submission to Lender of the next Schedule of
Accounts as provided in Section 5.2. If an Account includes a charge for any
tax payable to any governmental taxing authority, Lender is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority for
the account of Borrower and to charge the Loan Account therefor. Whether or
not a Default or an Event of Default has occurred, Lender shall have the right,
at any time or times hereafter, in the name of Lender, any designee of Lender
or Borrower, to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone, telegraph or otherwise. Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly conclude any such
verification process.
5.4. Collection of Accounts. To expedite collection, Borrower
shall endeavor in the first instance to make collection of its Accounts for
Lender. All remittances received by Borrower on account of Accounts shall be
held as Lender's property by Borrower as trustee of an express trust for
Lender's benefit and Borrower shall immediately deposit same in the Dominion
Account. After the occurrence of an Event of Default, Lender shall have the
right to notify Account Debtors that Accounts have been assigned to Lender and
to collect Accounts directly in its own name and to charge the collection costs
and expenses, including reasonable attorneys' fees, to Borrower. Lender has no
duty to protect, insure, collect or realize upon the Accounts or preserve
rights in them. For the purpose of computing interest hereunder, all items of
payment received by Lender shall be deemed applied by Lender on account of the
Obligations on the first Business Day after Lender's receipt of payment in
Chicago, Illinois, in immediately available funds.
SECTION 6. PROVISIONS RELATING TO INVENTORY
6.1. Representations, Warranties and Covenants. With respect to
Inventory, Borrower represents and warrants to Lender that Lender may rely, in
determining which items of Inventory constitute Eligible Inventory, on all
statements and representations made by Borrower with respect to any Inventory
and that: All Inventory is presently and will continue to be located at
Borrower's places of business listed on Exhibit B and will not be removed
therefrom except as authorized by Section 4.4 of this Agreement; no Inventory
is now, nor shall any Inventory at any time or times hereafter be, stored with
a bailee, warehouseman or similar party without Lender's prior written consent;
no Inventory is or will be consigned to any Person without Lender's prior
LOAN AND SECURITY AGREEMENT - Page 21
26
written consent; and no Inventory is or will be produced in violation of the
Fair Labor Standards Act.
6.2. Inventory Reports. Borrower agrees to furnish Lender with
Inventory reports at such times as Lender may request, but at least once each
month. Such reports shall be in form and detail satisfactory to Lender.
Borrower shall conduct a physical inventory no less frequently than annually
and shall provide to Lender a report based on each such physical inventory
promptly thereafter, together with such supporting information as Lender shall
in its discretion request.
6.3. Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which
generated an Account on which such Account Debtor is obligated in excess of
$20,000, Borrower shall notify Lender of the same immediately, specifying the
reason for such return and the location and condition of the returned
Inventory.
SECTION 7. PROVISIONS RELATING TO EQUIPMENT
7.1. Representations, Warranties and Covenants. With respect to
the Equipment, Borrower represents, warrants and covenants to and with Lender
that the Equipment is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted. Borrower will not permit any of the
Equipment to become affixed to any real Property leased to Borrower so that an
interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of Lender, and Borrower will not permit
any of the Equipment to become an accession to any personal Property other than
Equipment subject to first priority Liens in favor of Lender or subject to
Permitted Liens. Immediately on request therefor by Lender, Borrower shall
deliver to Lender any and all evidence of ownership, if any, of any of the
Equipment (including, without limitation, certificates of title and
applications for title). Borrower shall maintain accurate records itemizing
and describing the kind, type, quality, quantity and value of its Equipment and
all dispositions made in accordance with Section 7.2 hereof, and shall furnish
Lender with a current schedule containing the foregoing information on at least
an annual basis and more often if requested by Lender.
7.2. Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (A) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $150,000 or less, provided that all proceeds thereof are
turned over to Lender, or (B) replacements of Equipment that is substantially
worn, damaged or obsolete with Equipment of like kind, function and value,
provided that the replacement Equipment shall be acquired prior to or
concurrently with any disposition of the Equipment that is to be replaced, the
replacement
LOAN AND SECURITY AGREEMENT - Page 22
27
Equipment shall be free and clear of Liens other than Permitted Liens, Borrower
shall give Lender at least five days prior written notice of such disposition
and Borrower shall turn over to Lender all proceeds realized from any such
disposition.
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1. General Representations and Warranties. To induce Lender to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender as follows:
(A) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas; has duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all states and jurisdictions where the character of its
Properties or the nature of its activities make such qualification necessary;
and has not been known as or used any corporate, fictitious or trade names in
the past seven years except as disclosed on Exhibit C attached hereto and made
a part hereof.
(B) Borrower has the right and power and is duly
authorized to enter into, deliver and perform this Agreement and each of the
Other Agreements to which it is a party, and this Agreement is, and each of the
Other Agreements when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower enforceable against it in accordance with
their respective terms.
(C) Borrower is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(within the meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loans to Borrower
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock, or be used
for any purpose which violates or is inconsistent with the provisions of
Regulations G, T, U or X of said Board of Governors.
(D) Borrower has, and is in good standing with respect
to, all governmental consents, approvals, authorizations, permits,
certificates, inspections, and franchises which materially affect its ability
to conduct its business as heretofore or proposed to be conducted by it and to
own or lease and operate its Properties as now owned or leased by it.
(E) Borrower owns or possesses all the patents,
trademarks, service marks, trade names, copyrights and licenses necessary for
the present and planned future conduct of its business without any known
conflict with the rights of others.
(F) Except as set forth on Exhibit D attached hereto and
made a part hereof, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of Borrower, threatened, against or affecting
Borrower or any of its Properties in any court or before any governmental
authority or arbitration board or tribunal, and no action, suit, proceeding or
investigation shown on Exhibit D involves the possibility of materially and
adversely affecting
LOAN AND SECURITY AGREEMENT - Page 23
28
the Properties or condition (financial or otherwise) of Borrower or the ability
of Borrower to perform this Agreement.
(G) Borrower has good, indefeasible and marketable title
to and fee simple ownership of, or valid and subsisting leasehold interests in,
all of its real Property, and good title to all of its other Property, in each
case, free and clear of all Liens except Permitted Liens.
(H) The balance sheet of Borrower and such other Persons
described therein as of March 31, 1994, and the related statements of income,
for the periods ended on such dates, have been prepared, to the best of
Borrower's knowledge, in accordance with GAAP (except for changes in
application in which Borrower's independent certified public accountants
concur), and present fairly the financial positions of Borrower at such dates
and the results of Borrower's operations for such periods. Since March 31,
1994, there has been no material change in the condition, financial or
otherwise, of Borrower and such other Persons as shown on the balance sheet as
of such date and no change in the aggregate value of Equipment and real
Property owned by Borrower or such other Persons, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. The fiscal year of Borrower for accounting purposes
ends on December 31 of each year.
(I) There is no fact which Borrower has failed to
disclose to Lender in writing which materially affects adversely or, so far as
Borrower can now foresee, will materially affect adversely the Properties,
business, prospects, profits, or condition (financial or otherwise) of Borrower
or the ability of Borrower to perform this Agreement.
(J) Borrower has not received any notice to the effect
that it is not in full compliance with any of the requirements of ERISA and the
regulations promulgated thereunder. No fact or situation that could result in
a material adverse change in the financial condition of Borrower (including,
but not limited to, any Reportable Event or Prohibited Transaction) exists in
connection with any Plan. Borrower has no withdrawal liability in connection
with a Multi-Employer Plan.
(K) Borrower has filed all federal, state and local tax
returns and other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees and other
governmental charges that are due and payable.
(L) Borrower has duly complied with, and its Properties,
business operations and leaseholds are in compliance in all material respects
with, the provisions of all federal, state and local laws, rules and
regulations applicable to Borrower, its Properties or the conduct of its
business.
(M) No Default or Event of Default will exist or result
from the execution and delivery of this Agreement or Borrower's performance
hereunder.
(N) There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
LOAN AND SECURITY AGREEMENT - Page 24
29
8.2. Reaffirmation and Survival of Representations. Each request
for a Loan made by Borrower pursuant to this Agreement or any of the Other
Agreements shall constitute (A) an automatic representation and warranty by
Borrower to Lender that there does not then exist any Default or Event of
Default, and (B) a reaffirmation as of the date of said request of all of the
representations and warranties of Borrower contained in this Agreement and the
Other Agreements are true in all material respects, except for any changes in
the nature of Borrower's business or operations that would render the
information contained in any exhibit hereto either materially inaccurate or
materially incomplete, so long as Lender has consented to such changes or such
changes are expressly permitted by this Agreement. Borrower covenants,
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement or any of the Other Agreements shall be
true at the time of Borrower's execution of this Agreement and the Other
Agreements, and shall survive the execution, delivery and acceptance thereof by
Lender and the parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1. Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
(A) Pay and discharge all taxes, assessments and
governmental charges upon it, its income and Properties as and when such taxes,
assessments and charges are due and payable, except and to the extent only that
such taxes, assessments and charges are being actively contested in good faith
and by appropriate proceedings, Borrower maintains adequate reserves on its
books there for and the nonpayment of such taxes does not result in a Lien upon
any Properties or Borrower other than a Permitted Lien. Borrower shall also
pay and discharge any lawful claims which, if unpaid, might become a Lien
against any of Borrower's Properties except for Permitted Liens.
(B) File all federal, state and local tax returns and
other reports Borrower is required by law to file and maintain adequate
reserves for the payment of all taxes, assessments, governmental charges, and
levies imposed upon it, its income, or its profits, or upon any Property
belonging to it.
(C) Pay to Lender, on demand, any and all fees, costs or
expenses which Lender pays to a bank or other similar institution (including,
without limitation, any reasonable fees paid by Lender to any Participating
Lender) arising out of or in connection with (i) the forwarding to Borrower or
any other Person on behalf of Borrower, by Lender of proceeds of loans made by
Lender to Borrower pursuant to this Agreement and (ii) the depositing for
collection, by Lender, of any check or item of payment received or delivered to
Lender on account of the Obligations.
LOAN AND SECURITY AGREEMENT - Page 25
30
(D) Preserve and maintain its separate corporate
existence and all rights, privileges, and franchises in connection therewith,
and maintain its qualification and good standing in all states in which such
qualification is necessary.
(E) Maintain its Properties in good condition and make
all necessary renewals, repairs, replacements, additions and improvements
thereto.
(F) Comply with all laws, ordinances, governmental rules
and regulations to which it is subject, and obtain and keep in force any and
all licenses, permits, franchises, or other governmental authorizations
necessary to the ownership of its Properties or to the conduct of its business,
which violation or failure to obtain might materially and adversely affect the
Properties or condition (financial or otherwise) of Borrower.
(G) (i) At all times make prompt payment of contributions
required to meet the minimum funding standards set forth in ERISA with respect
to each Plan; (ii) promptly after the filing thereof, furnish to Lender copies
of any annual report required to be filed pursuant to ERISA in connection with
each Plan and any other employee benefit plan of it and its Affiliates subject
to said Section; (iii) notify Lender as soon as practicable of any Reportable
Event and of any additional act or condition arising in connection with any
Plan which Borrower believes might constitute grounds for the termination
thereof by the Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States district court of a trustee to administer the
Plan; and (iv) furnish to Lender, promptly upon Lender's request therefor, such
additional information concerning any Plan or any other such employee benefit
plan as may be reasonably requested.
(H) Keep adequate records and books of account with
respect to its business activities in which proper entries are made in
accordance with GAAP (to the best of Borrower's knowledge) reflecting all its
financial transactions.
(I) Permit representatives of Lender, from time to time,
as often as may be reasonably requested, but only during normal business hours,
to visit and inspect the Properties of Borrower, inspect and make extracts from
its books and records, and discuss with its officers, its employees and its
independent accountants, Borrower's business, assets, liabilities, financial
condition, business prospects and results of operations.
(J) Cause to be prepared and furnished to Lender the
following (all to be kept and prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and are consistent with
GAAP): (i) as soon as possible, but not later than 90 days after the close of
each fiscal year of Borrower, unqualified audited financial statements of
Borrower as of the end of such year, certified as to the statements by a firm
of independent certified public accountants of recognized standing selected by
Borrower but acceptable to Lender (except for a qualification for a change in
accounting principles with which such accounting firm concurs) and an unaudited
financial statement of Borrower, certified by the principal financial officer
of Borrower as prepared in accordance with GAAP to the best of his knowledge
and fairly presenting the
LOAN AND SECURITY AGREEMENT - Page 26
31
financial position and results of operations of Borrower for such year; and
(ii) as soon as possible, but not later than 30 days after the end of each
month hereafter, unaudited interim financial statements of Borrower as of the
end of such month and of the portion of Borrower's fiscal year then elapsed,
certified by the principal financial officer of Borrower as prepared in
accordance with GAAP to the best of his knowledge, and fairly presenting the
financial position and results of operations of Borrower for such month and
period subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes. Concurrently with the delivery of
the financial statements described in clause (i) of this Section 9.1(J),
Borrower shall forward to Lender a copy of the accountants' letter to
Borrower's management that is prepared in connection with such financial
statements and also shall cause to be prepared and furnish to Lender a
certificate of the aforesaid certified public accountants certifying to Lender
that, based upon their examination of the financial statements of Borrower
performed in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default, or, if they are aware of
such Default or Event of Default, specifying the nature thereof. Concurrently
with the delivery of the financial statements described in clauses (i) and (ii)
of this Section 9.1(J), Borrower shall cause to be prepared and furnished to
Lender a certificate from the chief financial officer of Borrower certifying to
Lender that to the best of his knowledge, Borrower has kept, observed,
performed and fulfilled each and every covenant, obligation and agreement
binding upon Borrower in this Agreement and the Other Agreements and that no
Default or Event of Default has occurred, or, if such Default or Event of
Default has occurred, specifying the nature thereof.
(K) At Lender's request, promptly execute or cause to be
executed and deliver to Lender any and all documents, instruments and
agreements reasonably deemed necessary by Lender to perfect or to continue the
perfection of Lender's Liens as first priority Liens subject only to Permitted
Liens, to facilitate collection of the Collateral or otherwise to give effect
to or carry out the terms or intent of this Agreement or any of the Other
Agreements.
(L) Within 30 days after the end of each month, or more
frequently if requested by Lender, cause the chief financial officer of
Borrower to prepare and deliver to Lender a Compliance Certificate in the form
of Exhibit E attached hereto, with appropriate insertions.
(M) As soon as available, and in any event no later than
60 days after the end of each fiscal year of Borrower, deliver to Lender
Projections of Borrower for the forthcoming three fiscal years, year by year,
and the forthcoming fiscal year, month by month.
9.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
(A) Merge or consolidate, or permit any Subsidiary to
merge or consolidate, with any Person; nor acquire all or any substantial part
of the Properties of any Person.
LOAN AND SECURITY AGREEMENT - Page 27
32
(B) Make any loans or other advances of money (other than
for salary, travel advances, advances against commissions and other similar
advances in the ordinary course of business) to any Person in excess of an
aggregate $100,000 outstanding at any time for all such loans, except those
advances or loans made to various employees as identified in Exhibits I and J.
(C) Enter into any transaction with any Affiliate or
stockholder, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms which
are fully disclosed to Lender and are no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or stockholder of Borrower.
(D) Guarantee, assume, endorse or otherwise, in any way,
become directly or contingently liable with respect to the Indebtedness of any
Person except by endorsement of instruments or items of payment for deposit or
collection.
(E) Create or suffer to exist any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender; (ii) Liens for taxes
(excluding any Lien imposed pursuant to any of the provisions of ERISA) not yet
due or being contested as permitted by Section 9.1(A) hereof, but only if in
Lender's judgment such Lien does not affect adversely Lender's rights or the
priority of Lender's Lien in the Collateral; (iii) Liens securing the claims or
demands of materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons for labor, materials, supplies or rentals incurred in the ordinary
course of Borrower's business, but only if the payment thereof is not at the
time required and only if such Liens are junior to the Liens in favor of
Lender; (iv) Liens resulting from deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance,
social security and other like laws; (v) attachment, judgment and other similar
non-tax Liens arising in connection with court proceedings, but only if and for
so long as the execution or other enforcement of such Liens is and continues to
be effectively stayed and bonded on appeal in a manner satisfactory to Lender
for the full amount thereof, the validity and amount of the claims secured
thereby are being actively contested in good faith and by appropriate lawful
proceedings and such Liens do not, in the aggregate, materially detract from
the value of the Property of Borrower or materially impair the use thereof in
the operation of Borrower's business; (vi) reservations, exceptions, easements,
rights of way, and other similar encumbrances affecting real Property, provided
that, in Lender's judgment, they do not in the aggregate materially detract
from the value of said Properties or materially interfere with their use in the
ordinary conduct of Borrower's business and, if said real Property constitutes
Collateral, Lender has consented thereto; and (vii) such other Liens as Lender
may hereafter approve in writing.
(F) Make any payment of any part or all of any
Subordinated Debt in violation of the subordination agreement relating to such
Subordinated Debt or voluntarily prepay any Subordinated Debt; or enter into
any agreement (oral or written) which could in any way be construed to amend,
modify, alter or terminate any one or more instruments or agreements evidencing
or relating to any Subordinated Debt.
LOAN AND SECURITY AGREEMENT - Page 28
33
(G) Declare or make any Distributions.
(H) Hereafter create any Subsidiary or divest itself of
any material assets by transferring them to any Subsidiary to whose existence
Lender has consented.
(I) Make Capital Expenditures (including, without
limitation, by way of capitalized leases) which, in the aggregate, exceed
$350,000 during any fiscal year of Borrower.
(J) Transfer its principal place of business or chief
executive office, or open new manufacturing plants, or transfer existing
manufacturing plants, or maintain warehouses or records with respect to
Accounts or Inventory, to or at any locations other than those at which the
same are presently kept or maintained, as set forth on Exhibit B hereto, except
upon at least 60 days prior written notice to Lender and after the delivery to
Lender of financing statements, if required by Lender, in form satisfactory to
Lender to perfect or continue the perfection of Lender's Lien and security
interest hereunder.
(K) Enter into any new business or make any material
change in any of Borrower's business objectives, purposes and operations.
(L) Sell, lease or otherwise dispose of any of its
Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of Borrower's business for so long as no Event
of Default exists hereunder, (ii) a transfer of Property to Borrower by a
Subsidiary or (iii) dispositions expressly authorized by this Agreement.
(M) Use any corporate name (other than its own) or any
fictitious name, tradestyle or "d/b/a" except for names disclosed in writing to
Lender on or before the Closing Date.
(N) Permit the total annual compensation (including,
without limitation, salaries, fees, bonuses, commissions and other payments,
whether direct or indirect, in money, or otherwise but specifically excluding
compensation from existing employee incentive agreements) of its officers,
shareholders and directors to exceed during any fiscal year of Borrower 110% of
the amount paid during the preceding fiscal year.
(O) Own, purchase or acquire (or enter into any contract
to purchase or acquire) any "margin security" as defined by any regulation of
the Federal Reserve Board as now in effect or as the same may hereafter be in
effect unless, prior to any such purchase or acquisition or entering into any
such contract, Lender shall have received an opinion of counsel satisfactory to
Lender to the effect that such purchase or acquisition will not cause this
Agreement to violate Regulations G, T, U, or X or any other regulation of the
Federal Reserve Board then in effect.
(P) Make or have any Restricted Investment.
LOAN AND SECURITY AGREEMENT - Page 29
34
(Q) Change its fiscal year or permit any Subsidiary to
have a fiscal year different from that of Borrower.
(R) Create, assume or suffer to exist any indebtedness
for borrowed money or issue or sell any obligation of Borrower (whether
absolutely, concurrently or otherwise), excluding only (i) the Obligations;
(ii) accounts payable and accrued liabilities arising in the ordinary course of
Borrower's business; (iii) indebtedness incurred for the payment of Capital
Expenditures permitted by this Agreement; (iv) existing indebtedness of
Borrower which shall have been approved in writing by Lender, and which shall
be set forth on Exhibit F attached hereto and made a part hereof (and to the
extent set forth on Exhibit F, such indebtedness is approved by Lender); and
(v) such other indebtedness as Lender may hereafter approve in writing.
9.3. Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there - are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
(A) Maintain positive Cash Flow, measured on a rolling
three-month basis at the end of each calendar month, for the three-month period
that ends as of the end of each calendar month, from and including the calendar
month ending March 31, 1994. Cash Flow during any portion of a three-month
period that includes any month prior to March l, 1994 will be determined on a
consolidated basis.
(B) Maintain positive Cash Flow, measured on an annual
basis at the end of each fiscal year of Borrower, for the twelve-month period
that ends as of the end of such fiscal year of Borrower, from and including the
fiscal year of Borrower ending December 31, 1994. Cash Flow during the period
from January l, 1994 to March l, 1994 will be determined on a consolidated
basis.
(C) Maintain at all times a ratio of (i) the aggregate
Indebtedness of Borrower to (ii) Adjusted Tangible Net Worth of Borrower of not
more than 5.0 to one.
(D) Maintain at all times a ratio of Current Assets to
Current Liabilities of not less than 2.0 to one.
SECTION 10. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
Other Agreements, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, it is understood and agreed that
Lender will not make any Loan under Section 2 of this Agreement unless and
until each of the following conditions has been and continues to be satisfied,
all in form and substance satisfactory to Lender and its counsel:
10.1. Documentation. Lender shall have received the following
documents, each in form and substance satisfactory to Lender and its counsel:
LOAN AND SECURITY AGREEMENT - Page 30
35
(A) certified copies of Borrower's casualty insurance
policies, together with endorsements naming Lender as loss payee and as
mortgagee pursuant to a standard mortgagee clause, and certified copies of
Borrower's liability insurance policies, together with endorsements naming
Lender as a co-insured;
(B) copies of all filing receipts or acknowledgments
issued by any governmental authority to evidence any filing or recordation
necessary to perfect the Liens of Lender in the Collateral and evidence that
such Liens constitute valid and perfected security interests and Liens, having
the Lien priority specified in Section 4.3 hereof;
(C) landlord or warehouseman agreements with respect to
all premises leased by Borrower; except that, in the instances where Lender has
received landlord or warehouseman agreements with respect to all premises
originally leased by SE&P or TLW, confirmation letters with respect to
occupation of the premises by Borrower, as the successor-in-interest, shall be
satisfactory;
(D) a copy of the Articles or Certificate of
Incorporation of Borrower, and all amendments thereto, certified within 15 days
before the closing by the Secretary of State or other appropriate official of
its jurisdiction of incorporation;
(E) a copy of the bylaws of Borrower, and all amendments
thereto, certified as of the closing date by the Secretary of the Borrower;
(F) good standing certificates for Borrower, issued
within 15 days before the closing by the Secretary of State or other
appropriate official of Borrower's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's business activities or the
ownership of its Properties necessitates qualification;
(G) a closing certificate signed by the chief executive
officer and chief financial officer of Borrower dated as of the date hereof,
stating that (i) the representations and warranties set forth in Section 8
hereof are true and correct on and as of such date, (ii) Borrower is on such
date in compliance with all the terms and provisions set forth in this
Agreement and (iii) on such date no Default or Event of Default has occurred or
is continuing;
(H) Guaranty Agreements and security agreements from each
Guarantor for the benefit of Lender;
(I) the Other Agreements duly executed and delivered by
Borrower and/or the Guarantors, as appropriate;
(J) the written opinion of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel
to Borrower and Guarantors, regarding Borrower, Guarantors, the Loan Documents
and the transactions contemplated by this Agreement and the Other Agreements,
the form of which is attached hereto as Exhibit H;
LOAN AND SECURITY AGREEMENT - Page 31
36
(K) certificates evidencing 53% of the issued and
outstanding common stock of Borrower, with the duly executed blank stock powers
attached;
(L) fully paid endorsements to presently issued policies,
issued by a title insurance company satisfactory to Lender, each in an amount
equal to not less than the fair market value of the real Property or leasehold
interest, as the case may be, described in Exhibit G, insuring the Mortgage to
create a valid Lien on all real Property described in Exhibit G, with the
priority set forth in Exhibit G, with no exceptions (other than prior Liens as
noted in Exhibit G) which Lender shall not have approved in writing and no
survey exceptions; and
(M) such other documents, instruments and agreements as
Lender shall reasonably request in connection with the transaction contemplated
hereby.
10.2. Other Conditions. The following conditions have been and
shall continue to be satisfied:
(A) no Default or Event of Default shall exist;
(B) each of the conditions precedent set forth in the
Other Agreements shall have been satisfied;
(C) since July 31, 1994, there shall not have occurred
any material adverse change in the business, financial condition or results of
operations of Borrower, or the existence or value of any Collateral, or any
event, condition or state of facts which would reasonably be expected
materially and adversely to affect the business, financial condition or results
of operations of Borrower;
(D) no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to or arises out of
this Agreement or the consummation of the transactions contemplated hereby or
which, in Lender's judgment, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the Other Agreements; and
(E) Lender shall have received such certificates and
documents reflecting the Solvency of Borrower, after giving effect to the
transactions contemplated by this Agreement, as Lender shall find acceptable.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
LOAN AND SECURITY AGREEMENT - Page 32
37
(A) Borrower shall fail to pay any installment of
principal, interest or premium, if any, owing on the Term Note within ten days
after the due date of such installment;
(B) Borrower shall fail to pay any of the Obligations
that are not evidenced by the Term Note on the due date thereof (whether due at
stated maturity, on demand, upon acceleration or otherwise);
(C) any warranty, representation, or other statement made
or furnished to Lender by or on behalf of Borrower or Guarantor or in any
instrument, certificate or financial statement furnished in compliance with or
in reference to this Agreement or any of the Other Agreements proves to have
been false or misleading in any material respect when made or furnished;
(D) Borrower shall fail or neglect to perform, keep or
observe (i) any covenant contained in this Agreement (other than a covenant a
default in the performance or observance of which is dealt with specifically in
clause (ii) hereof or elsewhere in this Section 11.1) and the breach of such
covenant is not cured to Lender's satisfaction within 15 days after the sooner
to occur of Borrower's receipt of notice of such breach from Lender or the date
on which such failure or neglect becomes known to any officer of Borrower or
(ii) shall fail or neglect to perform, keep or observe any covenant contained
in Sections 4.3, 4.4, 4.5, 4.6, 5.2, 5.4, 7.2, 9.1(A), 9.1(E), 9.1(F), 9.1(J),
9.1(K), 9.1(N), 9.2 or 9.3;
(E) any event of default shall occur under, or Borrower
shall default in the performance or observance of any term, covenant, condition
or agreement contained in, any of the Other Agreements and such default shall
continue beyond any applicable period of grace;
(F) there shall occur any default or event of default on
the part of Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made;
(G) any material loss, theft, damage or destruction not
materially covered by insurance (as required by this Agreement and subject to
such deductibles as Lender shall have agreed to in writing), or sale, lease or
encumbrance of any of the Collateral or the making of any levy, seizure, or
attachment thereof or thereon except in all cases as may be specifically
permitted by other provisions of this Agreement;
(H) there shall occur any material adverse change in the
financial condition or business prospects of Borrower or any Guarantor;
(I) Borrower or any Guarantor shall cease to be Solvent
or shall suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of creditors, or any
petition for an order for relief shall be filed by or against Borrower or any
Guarantor under the Bankruptcy Code (if against Borrower or any Guarantor, the
LOAN AND SECURITY AGREEMENT - Page 33
38
continuation of such proceeding for more than 30 days), or Borrower or any
Guarantor shall make any offer of settlement, extension or composition to their
respective unsecured creditors generally;
(J) a Reportable Event shall occur which Lender shall
determine in good faith constitutes grounds for the termination by the Pension
Benefit Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any Plan, or if any
Plan shall be terminated or any such trustee shall be requested or appointed;
(K) any Guarantor shall revoke or attempt to revoke the
Guaranty Agreement signed by such Guarantor, or shall repudiate such
Guarantor's liability thereunder or shall be in default under the terms
thereof;
(L) any money judgment, writ or attachment or similar
process is entered or filed against Borrower or any of its Property and results
in the creation or imposition of any Lien that is not a Permitted Lien;
(M) Borrower shall incur, assume or suffer to exist any
Indebtedness, whether direct or contingent, other than Indebtedness listed on
Exhibit F hereto and other Indebtedness (exclusive of trade payables) up to an
aggregate of $500,000 at any time outstanding;
(N) any of the Indebtedness owed by Borrower to ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ("▇▇▇▇▇") shall be paid in
violation of the terms of that certain Subordination Agreement dated February
10, 1986 among ▇▇▇▇▇, Borrower and certain Affiliates of Borrower (the "▇▇▇▇▇
Agreement") or that certain Subordination Agreement dated February 10, 1986
among ▇▇▇▇▇, Borrower and certain Affiliates of Borrower (the "▇▇▇▇▇
Agreement"), respectively, or the ▇▇▇▇▇ Agreement or the ▇▇▇▇▇ Agreement shall
be amended without the prior written consent of Lender; or
(O) Lender shall in good ▇▇▇▇▇ ▇▇▇▇ itself insecure.
11.2. Acceleration of the Obligations. Without in any way limiting
the right of Lender to demand payment of any portion of the Obligations payable
on demand in accordance with Section 3.4 hereof, upon and at any time after the
occurrence of an Event of Default, all or any portion of the Obligations due or
to become due from Borrower to Lender (whether under this Agreement, any Other
Agreement or otherwise) shall, at Lender's option, become at once due and
payable without presentment, demand, protest, notice of dishonor, notice of
default, notice of intent to accelerate, notice of acceleration, or any other
notice whatsoever, and Borrower shall forthwith pay to Lender, in addition to
any and all sums and charges due, the entire principal of and interest accrued
on the Obligations.
11.3. Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
LOAN AND SECURITY AGREEMENT - Page 34
39
(A) All of the rights and remedies of a secured party
under the Code or under other applicable law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies shall
be cumulative, and none of which shall be exclusive, and shall be in addition
to any other rights or remedies contained in this Agreement or any of the Other
Agreements.
(B) The right to take immediate possession of the
Collateral, and (i) to require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) to enter any of
the premises of Borrower or wherever any of the Collateral shall be located,
and to keep and store the same on said premises until sold (and if said
premises be the Property of Borrower, Borrower agrees not to charge Lender for
storage thereof).
(C) The right to sell or otherwise dispose of all or any
Inventory or Equipment in its then condition, or after any further
manufacturing or processing thereof, at public or private sale or sales, with
such notice as may be required by law,. in lots or in bulk, for cash or on
credit, all as Lender, in its discretion, may deem advisable. Borrower agrees
that fifteen days written notice to Borrower of any public or private sale or
other disposition of such Collateral shall be reasonable notice thereof, and
such sale shall be at such locations as Lender may designate in said notice.
Lender shall have the right to conduct such sales on Borrower's premises,
without charge therefor, and such sales may be adjourned from time to time in
accordance with applicable law. Lender shall have the right to sell, lease or
otherwise dispose of such Collateral, or any part thereof, for cash, credit or
any combination thereof, and Lender may purchase all or any part of such
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set-off the amount of such price
against the Obligations.
(D) Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
(E) The proceeds realized from the sale of any Collateral
may be applied, after allowing two Business Days for collection, first to the
costs, expenses and reasonable attorneys' fees incurred by Lender in collecting
the Obligations, in enforcing Lender's rights under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising
for sale, selling and delivering any of the Collateral; secondly, to interest
due upon any of the Obligations; and thirdly, to the principal of the
Obligations. If any deficiency shall arise, Borrower shall remain liable to
Lender therefor.
11.4. Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the Other Agreements, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrower, heretofore, concurrently, or hereafter entered into,
LOAN AND SECURITY AGREEMENT - Page 35
40
shall be deemed cumulative to and not in derogation or substitution of any of
the terms, covenants, conditions, or agreements of Borrower herein contained.
The failure or delay of Lender to exercise or enforce any rights, Liens, powers
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
Liens, rights, powers and remedies, but all such Liens, rights, powers, and
remedies shall continue in full force and effect until all Loans and all other
Obligations owing or to become owing from Borrower to Lender shall have been
fully satisfied, and all Liens, rights, powers, and remedies herein provided
for are cumulative and none are exclusive.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender)
as Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to Borrower and in either Borrower's or
Lender's name, but at the reasonable cost and expense of Borrower:
(A) At such time or times hereafter as Lender or said
agent may determine, endorse Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control;
and
(B) At such time or times upon or after the occurrence of
an Event of Default as Lender or its agent may determine: (i) demand and
enforce payment of the Accounts by legal proceedings or otherwise and exercise
generally all of Borrower's rights and remedies with respect to the collection
of the Accounts; (ii) settle, adjust, compromise, discharge or release any of
the Accounts or other Collateral or any legal proceedings brought to collect
any of the Accounts or other Collateral; (iii) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (iv) receive and
open all mail addressed to Borrower and to notify postal authorities to change
the address for delivery thereof to such address as Lender may designate; (v)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (vi) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (vii) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (viii)
make and adjust claims under policies of insurance; and (ix) do all other acts
and things necessary, in Lender's reasonable determination, to fulfill
Borrower's obligations under this Agreement.
12.2. Indemnity. Borrower hereby agrees to indemnify Lender and
hold Lender harmless from and against any liability, loss, damage, suit, action
or proceeding ever suffered or incurred by Lender as the result of Borrower's
failure to observe, perform or discharge Borrower's duties hereunder. Without
limiting the generality of the foregoing, this indemnity shall extend to any
claims asserted against Lender by any Person under any Environmental Laws
LOAN AND SECURITY AGREEMENT - Page 36
41
or similar laws by reason of Borrower's or any other Person's failure to comply
with laws applicable to solid or hazardous waste materials or other toxic
substances, but this indemnity shall specifically exclude liability for breach
of any Environmental Laws caused solely and directly by Lender.
Notwithstanding any contrary provision in this Agreement, the obligation of
Borrower under this Section 12.2 shall survive the payment in full of the
Obligations and the termination of Lender's obligation to make Revolving Credit
Loans for a period of four (4) years beyond the date of such payment in full
and termination.
12.3. Modification of Agreement. This Agreement and the Other
Agreements may not be modified, altered or amended, except by an agreement in
writing signed by Borrower and Lender.
12.4 Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
Lender employs counsel for advice or other representation, or incurs legal
expenses or other costs or out-of-pocket expenses in connection with: (A) the
negotiation and preparation of this Agreement or any of the Other Agreements,
any amendment of or modification of this Agreement or any of the Other
Agreements; (B) the reasonable administration of this Agreement or any of the
Other Agreements and the transactions contemplated hereby and thereby; (C) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any of the Other Agreements or Borrower's affairs (other than
litigation in which Borrower is the prevailing party and in which Lender is
adverse to Borrower); (D) any attempt to enforce any rights of Lender against
Borrower or any other Person which may be obligated to Lender by virtue of this
Agreement or any of the Other Agreements, including, without limitation, the
Account Debtors (other than litigation in which Borrower is the prevailing
party and in which Lender is adverse to Borrower); or (E) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then, in any such event,
the reasonable attorneys' fees arising from such services and all expenses,
costs, charges and other fees of such counsel or of Lender or relating to any
of the events or actions described in this Section shall be payable, on demand,
by Borrower to Lender and shall be additional Obligations hereunder secured by
the Collateral. Additionally, if any taxes (excluding taxes imposed upon or
measured by the net income of Lender) shall be payable on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance
or recording of any of the Other Agreements, or the creation of any of the
Obligations hereunder, by reason of any existing or hereafter enacted federal
or state statute, Borrower will pay all such taxes, including, but not limited
to, any interest and penalties thereon, and will indemnify and hold Lender
harmless from and against liability in connection therewith. Borrower shall
have no obligation to pay the legal expenses or other costs incurred by a
Participating Lender or by Lender in connection with any sale or attempted sale
of any interest herein to a Participating Lender.
12.5. Indulgences Not Waivers. Lender's failure, at any time or
times hereafter, to require strict performance by Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance
LOAN AND SECURITY AGREEMENT - Page 37
42
therewith. Any suspension or waiver by Lender of an Event of Default by
Borrower under this Agreement or any of the Other Agreements shall not suspend,
waive or affect any other Event of Default by Borrower under this Agreement or
any of the Other Agreements, whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the Other Agreements and no Event of Default by
Borrower under this Agreement or any of the Other Agreements shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by
a duly authorized representative of Lender and directed to Borrower.
12.6. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
12.7. Successors and Assigns; Participations by Lender. This
Agreement and the Other Agreements shall be binding upon and inure to the
benefit of the successors and assigns of Borrower and Lender; provided,
however, that Borrower may not sell, assign or transfer any interest in this
Agreement or any of the Other Agreements, or any portion thereof, including,
without limitation, Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. Any purported assignment by Borrower in
violation of this Section 12.7 shall be void, without Lender's prior written
consent. Borrower hereby consents to Lender's participation, sale, assignment,
transfer or of the disposition, at any time or times hereafter, of this
Agreement, any of the Other Agreements, or any other Obligations, or of any
portion hereof or thereof, including, without limitation, Lender's rights,
title, interests, remedies, powers, and duties hereunder or thereunder. In the
case of an assignment, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would have if it
were the original "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignment. In the case of a
participation, each Participating Lender shall be entitled to receive all
information received by Lender regarding the credit-worthiness of Borrower,
including, without limitation, information required to be disclosed to a
participant pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by
the Comptroller of the Currency (whether such Participating Lender is subject
to the circular or not).
12.8. Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements are hereby made cumulative with the provisions of this
Agreement. Except as otherwise provided in Section 3.4 of this Agreement and
except as otherwise provided in any of the Other Agreements by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the Other Agreements, the provision contained in this
Agreement shall govern and control.
12.9. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so
LOAN AND SECURITY AGREEMENT - Page 38
43
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
12.10. Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be in writing and shall be
sent by certified or registered mail, return receipt requested, personal
delivery against receipt, or by telegraph or telex and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given
or delivered when delivered against receipt or three Business Days after
deposit in the mail, postage prepaid, or, in the case of telegraphic notice,
when delivered to the telegraph company, or, in the case of telex notice, when
sent, answer-back received, addressed as follows:
(A) If to Lender: Barclays Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President
w/ a copy to: ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(B) If to Borrower: Sepco Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
w/ a copy to: ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 12.10; provided, however, that any
notice, request or demand to or upon Lender pursuant to Section 3.3 shall not
be effective until received by Lender. Any written notice that is not sent in
conformity with the provisions hereof shall nevertheless be effective on the
date such notice is actually received by the noticed party.
12.11. Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement or any of the Other Agreements as a condition to
any action, inaction, condition or event, Lender shall be authorized to give or
withhold such consent in its sole and absolute discretion (unless otherwise
expressly provided herein) and to condition its consent upon the giving of
additional collateral security for the Obligations, the payment of money or any
other matter.
LOAN AND SECURITY AGREEMENT - Page 39
44
12.12. Demand Obligations. Nothing in this Agreement shall affect or
abrogate the demand nature of any portion of the Obligations expressly made
payable on demand by this Agreement or by any instrument evidencing or securing
same, and the occurrence of an Event of Default shall not be a prerequisite for
Lender's requiring payment of such Obligations.
12.13. Time of Essence. Time is of the essence of this Agreement and
the Other Agreements.
12.14. Entire Agreement. This Agreement and the Other Agreements,
together with all other instruments, agreements and certificates executed by
the parties in connection therewith or with reference thereto, embody the
entire understanding and agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or implied, oral or
written.
12.15. Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
12.16. Nonapplicability of Article 5069-15.01 et seq. Borrower and
Lender hereby agree that, except for Section 15.10(b) thereof, the provisions
of Tex. Rev. Civ. Stat. ▇▇▇. art. 5069-15.01 et seq. (▇▇▇▇▇▇ 1987) (regulating
certain revolving credit loans and revolving tri-party accounts) shall not
apply to this Agreement or any of the Other Agreements.
12.17. No Preservation or Marshaling. Borrower agrees that Lender
has no obligation to preserve rights to the Collateral against prior parties or
to marshal any Collateral for the benefit of any Person.
12.18. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER,
BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS COUNTY,
TEXAS, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
LOAN AND SECURITY AGREEMENT - Page 40
45
BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE,
AT THE ELECTION OF LENDER, BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF
OR FIVE DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID; PROVIDED
THAT LENDER SHALL ALSO SEND, BY TELECOPY, TO BORROWER A COPY OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS (AN AFFIDAVIT OF AN OFFICER, EMPLOYEE OR AGENT OF
LENDER STATING THAT SUCH TELECOPY WAS SENT TO BORROWER SHALL BE PRESUMPTIVELY
CORRECT IN ALL RESPECTS). NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE
TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.19. WAIVERS BY BORROWER. BORROWER WAIVES (A) THE RIGHT TO TRIAL
BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (B) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO
ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION
OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (C) NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (D)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (E) ANY RIGHT
BORROWER MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE LENDER TO
TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF
BORROWER UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS AND
THE EXECUTION BY
LOAN AND SECURITY AGREEMENT - Page 41
46
BORROWER, AND BY ANY PERSON WHOSE LOANS TO BORROWER IS USED IN WHOLE OR IN PART
TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING LENDER FROM ANY LOSS
OR DAMAGE LENDER MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF
PAYMENT RECEIVED BY LENDER FROM BORROWER OR ANY ACCOUNT DEBTOR AND APPLIED TO
THE OBLIGATIONS; AND (F) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES
THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO
THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS
FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
12.20. SPECIAL LOUISIANA PROVISIONS. Insofar as the validity or
perfection of the security interest hereunder or the remedies hereunder are
governed by the laws of the State of Louisiana, Borrower agrees as follows:
(i) For purposes of Louisiana executory process, Borrower
acknowledges the Obligations secured hereby, whether now existing or
to arise hereafter, and confesses judgment thereon if not paid when
due. Upon the occurrence of an Event of Default and at any time
thereafter so long as the same shall be continuing, and in addition to
all of the rights and remedies granted the Lender hereunder, it shall
be lawful for and Borrower hereby authorizes Lender without making a
demand or putting Borrower in default, a putting in default being
expressly waived, to cause all and singular the Collateral to be
seized and sold after due process of law, Borrower waiving the benefit
of any and all laws or parts of laws relative to appraisement of
property seized and sold under executory process or other legal
process, and consenting that the Collateral be sold without
appraisement, either in its entirety or in lots or parcels, as Lender
may determine, to the highest bidder for cash or on such other terms
as the plaintiff in such proceedings may direct. In addition, Lender
shall have all of the-rights and remedies available to it under this
Agreement or under the Louisiana Commercial Laws (Louisiana Revised
Statutes, Title 10), then in effect (La. R.S. 10:9-101 et seq.).
(ii) Borrower hereby waives:
(a) the benefit of appraisement provided for in
Articles 2332, 2336, 2723 and 2724 of the Louisiana
Code of Civil Procedure and all other laws conferring
the same;
(b) the demand and three (3) days notice of demand as
provided in Articles 2639 and 2721 of the Louisiana
Code of Civil Procedure;
LOAN AND SECURITY AGREEMENT - Page 42
47
(c) the notice of seizure provided by Articles 2293 and
2721 of the Louisiana Code of Civil Procedure; and
(d) the three (3) day delay provided for in Articles 2331
and 2722 of the Louisiana Code of Civil Procedure.
(iii) Borrower expressly authorizes and agrees that Lender
shall have the right to appoint a keeper of the Collateral pursuant to
the terms and provision of La. R.S. 9:5136.
(iv) All liens and security interests created and
perfected by Borrower prior to the effective date of Chapter 9 of the
Louisiana Commercial Laws (La. R.S. 10:9-101 et seq.) (the "Existing
Liens") shall remain effective according to their terms and the
applicable provisions of law, and nothing contained herein shall
constitute a novation of, or otherwise extinguish such Existing Liens.
12.21 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER
AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
LOAN AND SECURITY AGREEMENT - Page 43
48
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning hereof.
"BORROWER"
SEPCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
"LENDER"
BARCLAYS BUSINESS CREDIT, INC.
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Group Vice President
LOAN AND SECURITY AGREEMENT - Page 44
49
EXHIBIT 10.13
EXHIBIT A
SECURED PROMISSORY NOTE
(REAL ESTATE LOAN)
$1,329,277.37 Dallas, Texas April 1, 1994
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby promises to
pay to the order of Barclays Business Credit, Inc., a Connecticut corporation
("Lender"), at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or
at such other address as the holder hereof shall so notify Borrower, in such
coin or currency of the United States which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, the principal
sum of ONE MILLION, THREE HUNDRED TWENTY-NINE THOUSAND, TWO HUNDRED
SEVENTY-SEVEN AND 37/100 DOLLARS ($1,329,277.37), together with interest from
and after the date hereof on the unpaid principal balance outstanding at a
variable rate per annum equal to the lesser of (i) 1.50% above the Base Rate
(the "Annual Term Rate"), or (ii) the Maximum Legal Rate.
This Secured Promissory Note (this "Note") is the Term Note referred
to in, and is issued pursuant to, that certain Second Amended and Restated Loan
and Security Agreement between Borrower and Lender dated effective as of the
date hereof (as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and all other instruments
evidencing or securing the indebtedness hereunder (including, without
limitation, the "Other Agreements" as defined in the Loan Agreement) are hereby
made a part of this Note and are deemed incorporated herein in full. All
capitalized terms used in this Note, unless otherwise specifically defined
herein, shall have the meanings ascribed to them in the Loan Agreement.
Borrower acknowledges and understands that the Base Rate merely serves
as a basis upon which effective rates of interest are calculated for loans
making reference to the per annum rate of interest publicly announced by Bank
from time to time as its base rate and that such rate may not be the lowest or
best rate at which Bank calculates interest or extends credit. After the date
hereof, the rate of interest in effect hereunder shall be increased or
decreased, as the case may be, by an amount equal to any increase or decrease
in the Base Rate, with such adjustments to be effective as of the opening of
business on the date that any such change in the Base Rate becomes effective.
The Base Rate in effect on the date hereof shall be the Base Rate effective as
of the opening of business on the
Exhibit A--Page 1
(Secured Promissory Note)
50
date hereof, but if this Note is executed on a day that is not a Business Day,
the Base Rate in effect on the date hereof shall be the Base Rate effective as
of the opening of business on the last Business Day immediately preceding the
date hereof. The rate of interest in effect hereunder may be increased in
accordance with the provisions of the Loan Agreement. Interest due at the
Maximum Legal Rate shall be calculated on the basis of actual days elapsed over
a year of 365 or 366 days, as the case may be.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of this Note shall bear interest, at
a fluctuating rate per annum equal to the lesser of (i) 4% above the Base Rate
(the "Default Rate"), calculated daily (computed on the actual days elapsed
over a year of 360 days), or (ii) the Maximum Legal Rate.
If at any time the amount of such interest computed on the basis of
the Annual Term Rate or the Default Rate, whichever is applicable (the
"Applicable Rate"), would exceed the amount of such interest computed upon the
basis of the maximum rate of interest permitted by applicable state or federal
law in effect from time to time hereafter (the "Maximum Legal Rate"), the
interest payable under this Note shall be computed upon the basis of the
Maximum Legal Rate, but any subsequent reduction in the Applicable Rate shall
not reduce such interest thereafter payable hereunder below the amount computed
on the basis of the Maximum Legal Rate until the aggregate amount of such
interest accrued and payable under this Note equals the total amount of
interest which would have accrued if such interest had been at all times
computed solely on the basis of the Applicable Rate.
The principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(a) interest shall be due and payable monthly, in arrears, on
the first day of each month, commencing on May 1, 1994, and continuing
until such time as the full principal balance, together with all other
amounts owing hereunder, shall have been paid in full;
(b) principal shall be due and payable in thirty-one (31)
equal monthly installments of THIRTY-THREE THOUSAND THREE HUNDRED
THIRTY-THREE AND No/100 DOLLARS ($33,333) each, commencing on May 1,
1994, and continuing on the first day of each month thereafter to and
including the first day of December, 1996; and
(c) the entire unpaid principal balance hereof, together with
any and all other amounts due hereunder,
Exhibit A--Page 2
(Secured Promissory Note)
51
shall be due and payable on January 2, 1997.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 3.3 thereof or otherwise.
The occurrence of an Event of Default under the Loan Agreement,
including, without limitation, the failure to pay any installment of principal
or interest on this Note in full on or within ten days after the due date
thereof in accordance with the terms of this Note, shall constitute an event of
default under this Note and shall entitle Lender, at its option, upon, or at
any time after the occurrence of any such Event of Default, to declare the then
outstanding principal balance and accrued interest hereof to be, and the same
shall thereupon become, immediately due and payable without notice to or demand
upon Borrower, all of which Borrower hereby expressly waives. If this Note is
collected by or through an attorney at law, then Borrower shall be obligated to
pay, in addition to the principal balance and accrued interest hereof,
reasonable attorneys' fees and court costs.
This Note shall be subject to mandatory prepayment, without premium or
penalty, in accordance with the provisions of Section 3.4(D) of the Loan
Agreement. Subject to the next sentence, Borrower may voluntarily prepay,
without premium or penalty, this Note in whole at any time or in part from time
to time upon ten days' prior written notice to Lender, provided that each such
prepayment shall be made together with accrued interest on the principal amount
so prepaid on the prepayment date, and any partial prepayment shall be in an
amount equal to $100,000 or in $100,000 multiples thereof. If Borrower
terminates the Loan Agreement pursuant to Section 3.3(A) thereof in connection
with a refinancing of the Revolving Credit Loans and/or any Term Loan, then,
upon the effective date of any such termination, Borrower shall pay to Lender
(in addition to any other charges due under the terms of the Loan Agreement) a
prepayment premium in an amount equal to the applicable percentage set forth
below of the principal amount prepaid:
If Prepayment is Made Between
-----------------------------
The Following Dates, Inclusive: The Premium Shall Be:
------------------------------- ---------------------
April 1, 1994 and 0.5% of principal
January 1, 1997 amount prepaid
All partial prepayments, whether mandatory or voluntary, shall be
applied to installments of principal in the inverse order of their maturities.
Exhibit A--Page 3
(Secured Promissory Note)
52
No agreements, conditions, provisions or stipulations contained in the
Loan Agreement, this Note or any other instrument, document or agreement
between Borrower and Lender or default of Borrower, or the exercise by Lender
of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in the Loan Agreement,
this Note or any other agreement between Borrower and Lender, or the arising
from any contingency whatsoever, shall entitle Lender to charge or collect, in
any event, interest exceeding the Maximum Legal Rate and in no event shall
Borrower be obligated to pay interest exceeding such Maximum Legal Rate and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay a
rate of interest exceeding the Maximum Legal Rate, shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is charged or
collected in excess of the Maximum Legal Rate ("Excess"), Borrower acknowledges
and stipulates that any such charge or collection shall be the result of an
accident and bona fide error, and such Excess shall be, first, applied to
reduce the principal then unpaid hereunder; second, applied to reduce the
Obligations; and third, returned to Borrower, it being the intention of the
parties hereto not to enter at any time into a usurious or otherwise illegal
relationship. Borrower recognizes that, with fluctuations in the Annual Term
Rate, the Default Rate and the Maximum Legal Rate, such an unintentional result
could inadvertently occur. By the execution of this Note, Borrower covenants
that (i) the credit or return of any Excess shall constitute the acceptance by
Borrower of such Excess, and (ii) Borrower shall not seek or pursue any other
remedy, legal or equitable, against Lender, based in whole or in part upon the
charging or receiving of any interest in excess of the maximum authorized by
applicable law. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Lender, all interest at any time
contracted for, charged or received by Lender in connection with this Note,
shall be amortized, prorated, allocated and spread in equal parts during the
entire term of this Agreement.
Time is of the essence of this Note. To the fullest extent permitted
by applicable law, Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice
of dishonor, notice of nonpayment, notice of acceleration, notice of intent to
accelerate, notice of maturity, notice of protest, presentment for the purpose
of accelerating maturity, diligence in collection, and the benefit of any
exemption or insolvency laws.
Exhibit A--Page 4
(Secured Promissory Note)
53
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of Lender in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial exercise
by Lender of any right or remedy preclude any other right or remedy. Lender, at
its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against Borrower, any guarantor of the
indebtedness evidenced hereby or any other property or indebtedness due or to
become due to Borrower. Borrower agrees that, without releasing or impairing
Borrower's liability hereunder, Lender may at any time release, surrender,
substitute or exchange any collateral securing this Note and may at any time
release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas, as more fully provided in
Section 12.18 of the Loan Agreement.
This Note is a renewal, modification and consolidation, and not a
novation or extinguishment, of the following promissory notes (the "Prior
Notes"):
(a) that certain promissory note in the original principal sum
of $2,000,000, dated January 22, 1994, executed by Southern Engine &
Pump Company, a Delaware corporation, and Wesco Equipment, Inc., a
Delaware corporation, payable to the order of Lender, and
(b) that certain promissory note in the original principal sum
of $500,000, dated January 22, 1992, executed by ▇.▇. ▇▇▇▇▇▇ Bearing
Co., payable to the order of Lender.
All rights, liens, titles and security interests securing the Prior
Notes are and shall be preserved, maintained and carried forward to secure this
Note.
Exhibit A--Page 5
(Secured Promissory Note)
54
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed,
sealed and delivered on the date first above written.
SEPCO INDUSTRIES, INC.
By:
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
Exhibit A--Page 6
(Secured Promissory Note)
55
EXHIBIT B
BUSINESS LOCATIONS
(1) Borrower currently has the following business locations, and no
others:
I. With respect to business formerly conducted under the name of
Southern Engine & Pump Company:
1. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. (78408)
▇.▇. ▇▇▇ ▇▇▇▇ (78469)
Corpus Christi, Texas
4. ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇ (78233)
▇.▇. ▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇-▇▇▇▇)
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
5. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 12 (75061)
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
6. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ (88240)
▇.▇. ▇▇▇ ▇▇▇▇ (88241)
Hobbs, New Mexico
7. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (77041)
▇.▇. ▇▇▇ ▇▇▇▇ (77251)
Houston, Texas
8. ▇▇▇ ▇▇▇ ▇▇▇▇▇ (70518)
Broussard, Louisiana
▇.▇. ▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
9. 1712 Avenue H (Odessa-Sub-
Branch)
▇.▇. ▇▇▇ ▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
10. 1803 West Cotton (75607)
▇.▇. ▇▇▇ ▇▇▇▇ (75602)
Longview, Texas
Exhibit B--Page 1
(Business Locations)
56
11. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
12. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ 338 (79764)
▇.▇. ▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇▇, ▇▇▇▇▇
13. ▇▇▇▇ ▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
14. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (71107)
▇.▇. ▇▇▇ ▇▇▇▇ (71137)
Shreveport, Louisiana
15. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
16. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
17. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
18. ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
19. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
II. With respect to business formerly conducted under the name of
Wesco Equipment:
1. 4302 Creekmont (77018)
▇.▇. ▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇)
Houston, Texas
2. ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
4. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Exhibit B--Page 2
(Business Locations)
57
III. With respect to business formerly conducted under the name of
▇. ▇. ▇▇▇▇▇▇ Bearing Co.:
1. 2603 ▇▇▇▇▇▇▇▇ (77004)
▇.▇. ▇▇▇ ▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇▇▇, ▇▇▇▇▇
2. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
4. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
5. ▇▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
6. ▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
7. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
8. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
10. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
IV. With respect to business formerly conducted under the name of
▇▇▇▇▇▇▇'▇ Industrial Supplies, Inc.
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3. ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
4. ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Exhibit B--Page 3
(Business Locations)
58
(2) Borrower maintains its books and records relating to Accounts and
General Intangibles at: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(3) During the preceding three-year period, Borrower has had no
office, place of business or agent for process located in any county other than
as set forth above, except:
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. Dallas and Potter Counties
Texas
3. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
4. 5 miles west of ▇▇▇ ▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
5. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
6. ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
7. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
8. ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
10. ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
11. ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12. ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Exhibit B--Page 4
(Business Locations)
59
EXHIBIT C
CORPORATE NAMES
(1) Borrower's correct corporate name, as registered with the
Secretary of State of the State of Texas, is:
SEPCO Industries, Inc.
(2) During the preceding seven-year period, Borrower has used the
following names:
Southern Engine & Pump Company
Wesco Equipment, Inc.
▇▇▇▇▇▇▇ Southwest, Inc.
Shoreline Company, Inc.
Shoreline Supply, Inc.
Shoreline Equipment Company, Inc.
▇.▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Bearing
▇▇▇▇▇▇▇'▇ Industrial Supplies, Inc.
PURC, Inc.
DMS Corporation
Exhibit C--Page 1
(Corporate Names)
60
EXHIBIT D
LITIGATION
(1) There are no proceedings pending against Borrower in any court,
except as follows:
DESCRIPTION PLAINTIFF COURT CASE NO.
1. The Plaintiff has alleged a former ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 189th Judicial 92-4777
officer of ▇. ▇. ▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇) vs. ▇. ▇. ▇▇▇▇▇▇ Court, ▇▇▇▇▇▇,
negligently and grossly accused Plaintiff Bearing County
of four disparaging and slanderous acts.
Plaintiff has claimed damages of $8,000,000
as a result of corporate officer's remarks.
Plaintiff's accusations are without merit.
Case is being handled by SEPCO's insurance
carrier. We expect no damage in this case.
2. Personal injury lawsuit. Defense and ▇▇▇▇▇ ▇▇▇▇▇▇▇ 16th Judicial 900781
claims, if any, are covered by insurance. vs. Texaco, et al. District Court,
(includes SEPCO) St. ▇▇▇▇ ▇▇▇▇▇▇,
State of LA
3. Plaintiff, a former employee of ▇. ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ County 632,718
▇▇▇▇▇▇, alleges money is owed to him for vs. ▇. ▇. ▇▇▇▇▇▇ Civil Court
commissions on product sales and salary and SEPCO of Law #3
under an employment contract. Plaintiff Industries, Inc.
originally sought $35,000 in damages but
proposed a settlement offer of $12,500.
▇. ▇. ▇▇▇▇▇▇ rejected the offer. We believe
the suit is without merit.
(2) The only threatened litigation of which Borrower is aware is as
follows:
None.
▇▇▇▇▇▇▇:324
- 1 -
61
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
_________________, 19__
TO: Barclays Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned, the chief financial officer of Sepco Industries,
Inc., a Texas corporation ("Borrower"), gives this certificate to Barclays
Business Credit, Inc. ("Lender") in accordance with the requirements of Section
9.1(L) of that certain Second Amended and Restated Loan and Security Agreement
dated April 1, 1994, between Borrower and Lender (the "Loan Agreement").
Capitalized terms used in this Certificate, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement:
(1) Based upon my review of the balance sheets and statements of
income of Borrower for the fiscal [month] [year] ending _____________, 19__,
copies of which are attached hereto, and supported by the calculations shown
below, I hereby certify that as of the end of such [month] [year]:
(a) Capital Expenditures and payments on account of capital leases
for the fiscal year to the date of the financial statements to which
this certificate is attached total $_____________.
The requirement of the Loan Agreement (Section 9.2(I)) is no more than
$350,000 during any fiscal year.
(b) If this certificate is furnished as of the end of a fiscal
year, total annual compensation (other than compensation from existing
incentive agreements) for officers, shareholders and directors is ____
% of the amount paid during the preceding fiscal year.
The requirement of the Loan Agreement (Section 9.2(N)) is no more than
110%.
(c) The Cash Flow, measured on a rolling three-month basis at the
end of each calendar month, for the calendar month ending on the date
of the financial statements to which this certificate is attached is
$________, calculated as set forth below.
Exhibit E--Page 1
(Compliance Certificate)
62
The requirement of the Loan Agreement is positive Cash Flow, measured on a
rolling three-month basis at the end of each calendar month, for the
three-month period that ended as of the end of each calendar month:
(i) Adjusted Net Earnings From Operations for the
three-month period ended to date:
(1) net earnings or loss after
provision for income taxes $___________
(2) extraordinary items $___________
(3) Adjusted Net Earnings From
Operations ((1) less (2)) $___________
(ii) Non-cash charges in respect
to depreciation and amortization: $___________
(iii) Capital Expenditures: $___________
(iv) Scheduled principal payments
on Indebtedness: $___________
(v) Cash Flow ((i) plus (ii) less
(iii) less (iv)): $___________
(d) If this certificate is furnished as of the end of a fiscal year,
the Cash Flow for the fiscal year ending as of the date of the financial
statements to which this certificate is attached is $______________,
calculated as set forth below.
The requirement of the Loan Agreement is positive Cash Flow, measured on an
annual basis at the end of each fiscal year of Borrower, for the twelve-month
period that ended as of the end of such fiscal year of Borrower, from and
including the fiscal year of Borrower ending December 31, 1994:
(i) Adjusted Net Earnings From Operations for the fiscal year to
date:
(1) net earnings or loss after
provision for income taxes $________________
(2) extraordinary items $________________
(3) Adjusted Net Earnings From
Operations ((1) less (2)) $________________
Exhibit E--Page 2
(Compliance Certificate)
63
(ii) Non-cash charges in respect
to depreciation and amortization: $________________
(iii) Capital Expenditures: $________________
(iv) Scheduled principal payments
on Indebtedness: $________________
(v) Cash Flow ((i) plus (ii) less
(iii) less (iv)): $________________
(e) The ratio of Indebtedness to Adjusted Tangible Net Worth as of the
date of the financial statements to which this certificate is attached is ___
to 1.0, calculated as set forth below.
The requirement of the Loan Agreement is not less than 5.0 to 1.0:
(i) Aggregate Indebtedness: $_________________
(ii) Adjusted Tangible Assets: $_________________
(iii) Liabilities: $_________________
(iv) Subordinated Debt $_________________
(v) Adjusted Tangible Net Worth
((ii) less (iii) plus (iv)): $_________________
(vi) Ratio of (i) to (v): __________ to 1.0
(f) The ratio of Current Assets to Current Liabilities as of the date
of the financial statements to which this certificate is attached is
_______________ to 1.0, calculated as set forth below.
The requirement of the Loan Agreement is not less than 2.0 to 1.0:
(i) Current Assets: $__________________
(ii) Current Liabilities: $__________________
(2) The financial statements to which this certificate is attached have been
prepared in accordance with GAAP to the best of my knowledge and fairly present
the consolidated financial positions and results of operations of Borrower and
its Subsidiaries (if any) for the period covered thereby.
Exhibit E--Page 3
(Compliance Certificate)
64
(3) No Default exists on the date hereof, other than:
_____________________________________(if none, so state).
(4) No Event of Default exists on the date hereof, other than:
____________________________________________ (if none, so state).
Very truly yours,
------------------------
Chief Financial Officer
Exhibit E--Page 4
(Compliance Certificate)
65
EXHIBIT F
EXISTING INDEBTEDNESS
[Attached.]
Exhibit F--Page 1
(Existing Indebtedness)
66
SEPCO INDUSTRIES, INC.
Notes Payble Rollforward
12/31/93 File: Noterol1
G/L
Account Balance Balance Current Long
Number Lender Collateral 12/31/92 Additions Payments 12/31/93 Portion Term
-----------------------------------------------------------------------------------------------------------------------------------
000-2580 ▇▇▇▇▇ ▇▇▇▇▇▇ 97,723 97,723 97,723
------------------------------------------------------------------
Total-SEPCO 4,454,490 1,973,856 387,225 6,041,121 1,134,766 4,906,355
==================================================================
000-2030 ▇▇▇▇▇▇▇'▇ Revolver Inventory and Receivables 6,138,820 61,114,304 59,910,495 7,342,629 7,342,629
000-2410 ▇▇▇▇▇▇▇'▇ - Real Estate, Certain Real Estate & 1,633,337 438,700 1,194,637 442,224 752,413
PP&E Equipment
------------------------------------------------------------------
Total ▇▇▇▇▇▇▇'▇ 7,772,157 61,114,304 60,349,195 8,537,266 442,224 8,095,042
▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 96,754 12,109 86,645 13,320 71,325
000-2430 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Fort Worth Real Estate 42,795 5,356 37,439 5,891 31,548
(Pledged to ▇▇▇▇▇▇ Square) ------------------------------------------------------------------
Total - S E & P 7,911,707 61,114,304 60,366,660 8,659,351 461,435 8,197,916
==================================================================
000-2030 ▇▇▇▇▇▇▇'▇ Revolver Inventory and Receivables 1,458,107 8,551,811 8,114,019 1,895,899 1,895,899
000-2430 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ WESCO Real Property 266,855 18,151 248,705 19,853 228,851
------------------------------------------------------------------
Total - WESCO 1,724,962 8,551,881 8,132,170 2,144,603 19,853 2,124,750
==================================================================
EXHIBIT F
67
SEPCO INDUSTRIES, INC.
Notes Payable Rollforward
12/31/93
G/L Secured
Account Note Interest Note Maturity or
Number Lender Number Rate Date Date Payment Terms Unsecured
--------------------------------------------------------------------------------------------------------------------------------
3 Installments
000-2580 ▇▇▇▇▇ ▇▇▇▇▇▇ 18% Int paid monthly.
Principal due in 3
installments to
lender's estate upon Unsecured
Total - SEPCO
000-2030 ▇▇▇▇▇▇▇'▇ Revolver Prime 1 1/4% 1/22/92 1/02/97 Secured
000-2410 ▇▇▇▇▇▇▇'▇ - Real Estate, PP&E Prime 1 3/4% 1/22/92 1/02/97 $33,333/mo. Principal Secured
+$3,518.51 Payment from
Sale of New Orleans
Property
Total ▇▇▇▇▇▇▇'▇
000-2430 ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Base Rate + 1 1/2%, 4/24/92 4/24/99 $1,699.77/mo. Principal
Floating & Interest Secured
000-2430 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Base Rate + 1 1/2%, 4/24/92 4/24/99 $751.82/mo. Principal
(Pledged to ▇▇▇▇▇▇ Square) Floating & Interest Secured
Total - S E & P
000-2030 ▇▇▇▇▇▇▇'▇ Revolver Prime 1 1/4% 1/22/92 1/02/97 Secured
000-2430 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 9.0% 8/20/92 8/01/92 452.58/mo. Principal
& Interest Secured
Total - WESCO
EXHIBIT F
68
SEPCO INDUSTRIES, INC.
Notes Payable Rollforward
12/31/93 File: Noterol1
G/L
Account Balance Balance Current Long
Number Lender Collateral 12/31/92 Additions Payments 12/31/93 Portion Term
-----------------------------------------------------------------------------------------------------------------------------------
>
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.00 16,000.00 16,000.00 6,000.00 10,000.00
000-2460 ▇▇▇▇ ▇▇▇▇▇▇ 0.00 10,364.00 10,364.00 3,887.00 6,477.00
000-2460 ▇▇▇▇ ▇▇▇▇▇▇▇, Jr. 0.00 4,000.00 4,000.00 1,500.00 2,500.00
000-2460 ▇▇▇ ▇▇▇▇▇▇▇▇ 0.00 8,000.00 8,000.00 3,000.00 5,000.00
000-2460 ▇▇▇▇▇▇ ▇▇▇▇ 0.00 5,612.00 5,612.00 2,105.00 3,507.00
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇ Trust 0.00 1,200,000.00 1,200,000.00 450,000.00 750,000.00
000-2460 ▇. ▇. ▇▇▇▇▇▇, ▇▇. 0.00 280,000.00 280,000.00 105,000.00 175,000.00
000-2460 ▇▇▇▇▇ ▇▇▇▇▇▇ Trust 0.00 73,620.00 73,620.00 27,608.00 46,012.00
000-2460 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Trust 0.00 147,236.00 147,236.00 55,214.00 92,022.00
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Queen Trust 0.00 80,000.00 80,000.00 30,000.00 50,000.00
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust 0.00 80,000.00 80,000.00 30,000.00 50,000.00
EXHIBIT F
69
SEPCO INDUSTRIES, INC.
Notes Payable Rollforward
12/31/93
G/L Secured
Account Note Interest Note Maturity or
Number Lender Number Rate Date Date Payment Terms Unsecured
---------------------------------------------------------------------------------------------------------------
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 7.0% 10/27/93 10/27/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇ ▇▇▇▇▇▇ 7.0% 10/21/93 10/21/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇ ▇▇▇▇▇▇▇, Jr. 7.0% 10/12/93 10/12/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇ ▇▇▇▇▇▇▇▇ 7.0% 10/12/93 10/12/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇ ▇▇▇▇ 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇ Trust 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇.▇. ▇▇▇▇▇▇, ▇▇. 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇ ▇▇▇▇▇▇ Trust 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
Trust 3 Installments
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Queen 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
Trust 3 Installments
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust 7.0% 9/30/93 9/30/96 Principal Due Annually Unsecured
3 Installments
EXHIBIT F
70
SEPCO INDUSTRIES, INC.
Notes Payable Rollforward
12/31/93 File Noterol1
G/L
Account Balance Balance Current Long
Number Lender Collateral 12/31/92 Additions Payments 12/31/93 Portion Term
-----------------------------------------------------------------------------------------------------------------------------------
>
000-2450 Southwestern Life Brittmore Real 2,023,479 69,212 1,954,267 76,555 1,877,712
Property
000-2440 ▇▇▇▇▇▇ ▇▇▇▇▇ 316,667 100,000 216,667 100,000 116,667
000-2440 ▇▇▇▇▇▇ ▇▇▇▇▇ 138,750 15,000 123,750 15,000 108,750
000-2440 ▇▇▇▇▇ ▇▇▇▇▇▇ 1,813,121 196,013 1,617,108 196,013 1,421,095
000-2440 ▇▇▇▇▇ ▇▇▇▇▇▇ 64,750 7,000 57,750 7,000 50,750
000-2460 ▇▇▇▇▇ ▇▇▇▇▇▇ 0.00 8,000,00 0.00 8,000 3,000,00 5,000.00
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.00 20,000.00 0.00 20,000 7,500.00 12,500.00
000-2460 ▇▇▇▇ ▇▇▇▇▇ 0.00 7,200.00 0.00 7,200.00 2,700.00 4,500.00
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 0.00 1,824.00 0.00 1,824.00 684.00 1,140.00
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. 0.00 24,000.00 0.00 24,000.00 9,000.00 15,000.00
000-2460 ▇▇▇ ▇▇▇▇▇▇▇ 0.00 8,000.00 8,000 3,000.00 5,000.00
EXHIBIT F
71
SEPCO INDUSTRIES, INC.
Notes Payable Rollforward
12/31/93
G/L Secured
Account Note Interest Note Maturity or
Number Lender Number Rate Date Date Payment Terms Unsecured
---------------------------------------------------------------------------------------------------------------------------
000-2450 Southwestern Life 30515 10.125% 11/08/79 12/01/06 $22,578/mo. Principal and Interest Secured
000-2440 ▇▇▇▇▇▇ ▇▇▇▇▇ 11.5% 2/28/91 2/28/96 8,333.33/mo. Principal plus Unsecured
Accrued Interest
000-2440 ▇▇▇▇▇▇ ▇▇▇▇▇ 12.0% 1/14/82 1/14/97 Qtrly Principal Pymt of $3,750 Unsecured
beginning April 1992
000-2440 ▇▇▇▇▇ ▇▇▇▇▇▇ 12.3333% 1/14/82 1/14/97 Qtrly Principal Pymt of $49,003.28 Unsecured
beginning April 1992
000-2440 ▇▇▇▇▇ ▇▇▇▇▇▇ 12.0% 1/14/82 1/14/97 Qtrly Principal Pymt of $1,750 Unsecured
beginning April 1992
000-2460 ▇▇▇▇▇ ▇▇▇▇▇▇ 7.0% 10/18/93 10/18/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇ 7.0% 10/19/93 10/19/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇ ▇▇▇▇▇ 7.0% 10/29/93 10/29/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 7.0% 10/07/93 10/07/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. 7.0% 10/08/93 10/08/96 Principal Due Annually Unsecured
3 Installments
000-2460 ▇▇▇ ▇▇▇▇▇▇▇ 7.0% 10/25/93 10/25/96 Principal Due Annually Unsecured
3 Installments
EXHIBIT F
72
SECURED BALANCE BALANCE
OR AT AT
PAYMENT TERMS UNSECURED COLLATERAL 12/31/92 ADDITIONS PAYMENTS 12/31/93
------------------------------------------------------------------------------------------------------------------------------------
2/97 Secured Inv. & Rec. 4,776,288.47 34,456,776.63 34,465,527.11 4,767,537.89
2/97 8,333/mo P Secured Certain real estate 408,337.00 99,996.00 308,341.00
and equip.
1/94 725.83/mo P&I Secured Bay City real estate 47,075.52 1,766.84 45,308.68
2/94 1,517.49/mo P&I Secured JIS Stock 53,589.87 13,456.78 40,133.09
2/94 4,349.08/mo P&I Secured JIS Stock 153,587.29 38,566.64 115,020.65
2/96 6,557/mo P&I Secured Computer equip. 213,768.68 48,764.51 165,004.17
1/96 311.24/mo P&I Secured Bay City real estate 11,423.82 2,714.68 8,709.14
5/94 Settlement Secured HP Computer equip. 86,976.81 86,976.81 0.00
1/02 4,246.47/mo P&I Unsecured 342,270.60 65,607.04 276,663.56
5/93 2,486/mo P&I Secured Baytown real estate 18,733.33 18,733.33 0.00
9/93 4,185/mo P&I Secured 2nd lien on A/R 8,282.43 8,282.43 0.00
& Inv.
ee. Unsecured 31,904.08 0.00 31,904.08
---------------------------------------------------------------
6,152,237.90 0.00 384,865.06 5,758,622.26
1/95 6,940/mo P&I Secured DMS Stock 201,926.30 67,860.57 134,065.73
---------------------------------------------------------------
201,926.30 0.00 67,860.57 134,065.73
---------------------------------------------------------------
6,354,164.20 0.00 452,725.63 5,892,687.99
===============================================================
73
EXHIBIT G
REAL PROPERTY FORMERLY OWNED IN THE NAME OF SOUTHERN ENGINE &
PUMP COMPANY
1. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 1
2. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Fair Market Value: $335,000
Title Policy Required: Yes
Survey Required: Yes
Permitted Liens: See Attachment 2
3. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 3
4. 320 Time Saver Avenue, Harahan, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Louisiana
Fair Market Value: $1,050,000
Title Policy Required: Yes
Survey Required: Yes
Permitted Liens: See Attachment 4
REAL PROPERTY OWNED BY SEPCO INDUSTRIES, INC.
1. ▇▇▇▇ ▇. ▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Fair Market Value: $380,000
Title Policy Required: Yes
Survey Required: Yes
Permitted Liens: See Attachment 5
2. ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Louisiana
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 6
3. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Fair Market Value: $285,000
Title Policy Required: Yes
Survey Required: Yes
Permitted Liens: See Attachment 7
Exhibit G--Page 1
(Property Owned)
74
4. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 8
REAL PROPERTY FORMERLY OWNED IN THE NAME OF ▇.▇. ▇▇▇▇▇▇ BEARING CO.
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Fair Market Value: $675,000
Title Policy Required: Yes
Survey Required: Yes
Permitted Liens: See Attachment 9
2. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 10
3. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 11
4. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Title Policy Required: No
Survey Required: No
Permitted Liens: See Attachment 12
Exhibit G--Page 2
(Property Owned)
75
ATTACHMENTS
to
Exhibit G
ATTACHMENT 1
1. RESERVATIONS, CONDITIONS, AND STIPULATIONS AS CONTAINED IN PATENT FROM THE
UNITED STATES IN BOOK 2, PAGE 309, MISCELLANEOUS RECORDS, LEA COUNTY, NEW
MEXICO.
2. TITLE TO ALL OF THE OIL, GAS, MINERALS AND MINERAL SUBSTANCES WITHIN AND
UNDERLYING THE PREMISES, TOGETHER WITH THE TITLE TO ALL OF THE OIL, GAS,
MINERALS, AND MINERAL SUBSTANCES WITHIN AND UNDERLYING THE PREMISES,
TOGETHER WITH THE DRILLING RIGHTS AND PRIVILEGES THERETO BELONGING IN BOOK
2, PAGE 309, MISCELLANEOUS RECORDS, LEA COUNTY, NEW MEXICO.
3. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED SEPCO POWER
PRODUCTS, INC. TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
4. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY SEPCO COMPRESSION
SERVICES, INC. TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
5. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY SHORELINE EQUIPMENT
COMPANY TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
6. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY SOUTHERN ENGINE &
PUMP COMPANY TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
7. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY WESCO EQUIPMENT, INC.
TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
8. FINANCING STATEMENT DATED, 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY SEPCO INTERNATIONAL, INC. TO
BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
Attachments to Exhibit G--Page 1
76
9. FINANCING STATEMENT DATED ---, FILED 12-22-88, BOOK 31, PAGE ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. EXECUTED BY SEPCO INDUSTRIES,
INC. TO BARCLAYSAMERICAN/BUSINESS CREDIT, INC.
Attachments to Exhibit G--Page 2
77
ATTACHMENT 2
1. All minerals and/or royalty interest as described in Deed recorded in
Volume 187, Page 200, Deed Records, Ector County, Texas, and amended by
instrument recorded in Volume 342, Page 104, Deed Records, Ector County,
Texas.
2. Oil and Gas Leases recorded in Volume 43, Page 505, and Volume 43, Page 453,
Deed Records, Ector County, Texas.
3. Well Site Designation recorded in Volume 371, Page 328, Deed Records, Ector
County, Texas.
4. Easements and/or rights-of-way:
a) To Barnsdall Oil Co., recorded at Volume 51, Page 55, Deed Records,
Ector County, Texas.
b) To ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Co., recorded at Volume 83, Page 427, and Volume
▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇.
c) To Pan American Petro. Corp., recorded at Volume 278, Page ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇.
d) To Pioneer National Gas Co., recorded at Volume 234, Page 406, Deed
Records, Ector County, Texas.
e) To TESCO recorded at Volume 87, Page ▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇.
f) To TESCO recorded at Volume 788, Page 584, Deed Records, Ector County,
Texas, and as shown on a survey dated January 6, 1992, prepared by S.
W. O. ▇▇▇▇▇▇, R.P.L.S. #280.
g) To ECUD at Volume 733, Page 568, and Volume 786, Page 733, Deed
Records, Ector County, Texas, and as shown on survey dated January 16,
1992, prepared by ▇. ▇. ▇▇▇▇▇▇, R.P.L.S. #280.
h) Sunray DX pipelines and Westar Transmission power lines on West side of
property as shown on a survey dated December 9, 1983, by ▇▇▇▇ ▇. ▇▇▇▇▇,
Registered Surveyor.
i) Overhead Electric Line along Westerly side of property as shown on
survey dated January 16, 1992, prepared by ▇. ▇. ▇▇▇▇▇▇, R.P.L.S. #280.
Attachments to Exhibit G--Page 3
78
5. UCC Financing Statement, recorded in Volume 860, Page 233, of the Deed
of Trust Records, Ector County, Texas, from Shoreline Equipment Company,
Debtor, to Barclays American/Business Credit, Inc., Secured Party.
6. UCC Financing Statement, recorded in Volume 860, Page 236, of the Deed of
Trust Records, Ector County, Texas, from Southern Engine and Pump Company,
Debtor, to Barclays American/Business Credit, Inc., Secured Party.
7. UCC Financing Statement, recorded in Volume 860, Page 239, of the Deed of
Trust Records, Ector County, Texas, from Sepco Industries, Inc., Debtor, to
Barclays American/Business Credit, Inc., Secured Party.
8. UCC Financing Statement, recorded in Volume 860, Page 242, of the Deed of
Trust Records, Ector County, Texas, from Sepco International, Inc., Debtor,
to Barclays American/Business Credit, Inc., Secured Party.
9. UCC Financing Statement, recorded in Volume 860, Page 245, of the Deed of
Trust Records, Ector County, Texas, from Sepco Power Products, Inc.,
Debtor, to Barclays American/Business Credit, Inc., Secured Party.
10. UCC Financing Statement, recorded in Volume 860, Page 248, of the Deed of
Trust Records, Ector County, Texas, from Sepco Compression Services, Inc.,
Debtor, to Barclays American/Business Credit, Inc., Secured Party.
11. UCC Financing Statement, recorded in Volume 860, Page 251, of the Deed of
Trust Records, Ector County, Texas, from Wesco Equipment, Inc., Debtor, to
Barclays American/Business Credit, Inc., Secured Party.
Attachments to Exhibit G--Page 4
79
ATTACHMENT 3
1. Financing Statement executed by Sepco Industries, Inc., Debtor, to Barclays
American/Business Credit, Inc., Secured Party, filed for record on December
22, 1988, in Volume 1988, Page 216, Public Official Records, ▇▇▇▇▇ County,
Texas.
2. Financing Statement executed by Sepco International, Inc., Debtor, to
Barclays American/Business Credit, Inc., Secured Party, filed for record on
December 22, 1988, in Volume 1988, Page 221, Public Official Records, ▇▇▇▇▇
County, Texas.
3. Financing Statement executed by Sepco Power Products, Inc., Debtor, to
Barclays American/Business Credit, Inc., Secured Party, filed for record on
December 22, 1988, in Volume 1988, Page 226, Public Official Records, ▇▇▇▇▇
County, Texas.
4. Financing Statement executed by Sepco Compression Services, Inc., Debtor,
to Barclays American/Business Credit, Inc., Secured Party, filed for record
on December 22, 1988, in Volume 1988, Page 231, Public Official Records,
▇▇▇▇▇ County, Texas.
5. Financing Statement executed by Shoreline Equipment Company, Debtor, to
Barclays American/Business Credit, Inc., Secured Party, filed for record on
December 22, 1988, in Volume 1988, Page 236, Public Official Records, ▇▇▇▇▇
County, Texas.
6. Financing Statement executed by Southern Engine and Pump Company, Debtor,
to Barclays American/Business Credit, Inc., Secured Party, filed for record
on December 22, 1988, in Volume 1988, Page 241, Public Official Records,
▇▇▇▇▇ County, Texas.
7. Financing Statement executed by Wesco Equipment, Inc., Debtor, to Barclays
American/Business Credit, Inc., Secured Party, filed for record on December
22, 1988, in Volume 1988, Page 246, Public Official Records, ▇▇▇▇▇ County,
Texas.
8. Visible, apparent and/or record easements in ▇▇▇▇▇ County, Texas, on or
across the herein described property.
Attachments to Exhibit G--Page 5
80
9. Mineral reservations set forth in instrument filed for record in Volume
643, Page 241, Deed Records, ▇▇▇▇▇ County, Texas.
Attachments to Exhibit G--Page 6
81
ATTACHMENT 4
1. COB 995, folio 694 - Servitude for sidewalk and utilities measuring 5 feet
in width along the front of the land, granted by LaSalle Properties, Inc.
to the Parish of Jefferson by act dated December 23, 1980.
2. COB 1033, folio 745 - Servitude for sidewalk and utilities measuring 5 feet
in width along Time Saver Avenue granted by LaSalle Properties, Inc. to the
Parish of Jefferson by act dated October 6, 1982.
3. COB 2546, folio 121 - Right of Way Permit granted by Southern Engine & Pump
Company to Louisiana Power & Light Company dated August 16, 1991.
4. Five foot servitude for sidewalk and utilities as shown on a plan of
resubdivision of ▇. ▇. ▇▇▇▇▇ & Sons, Inc., dated November 16, 1990,
approved under ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Ordinance No. 18186 on January 9, 1991 and
recorded in COB 2420, folio 144.
Attachments to Exhibit G--Page 7
82
ATTACHMENT 5
1. Easement granted by W. A. Courreges, et al to Texas Power & Light Company,
as evidenced by the instrument dated November 5, 1970 recorded in Volume
74080, Page 2211, of the Deed Records, Dallas County, Texas, and as shown
on survey dated January 9, 1992, prepared by L. ▇▇▇▇ ▇▇▇▇▇▇▇, R.P.L.S.
#3952.
2. Airport Zoning Ordinance No. 71-100 for Dallas-Fort Worth International
Airport, recorded in Volume 82173, Page 0178, of the Deed Records, Dallas
County, Texas.
3. Encroachment of building over 30 foot set-back line as shown on survey
dated January 9, 1992, prepared by L. ▇▇▇▇ ▇▇▇▇▇▇▇, R.P.L.S. #3952.
4. Deed of Trust dated February 10, 1986, recorded in Volume 86036, Page 4406,
of the Deed of Trust Records, Dallas County, Texas, from Sepco Industries,
Inc. to ▇▇▇ ▇. ▇▇▇▇▇▇, Trustee, securing the payment of multiple notes
therewith, described as follows: 1) principal sum of $14,500,000.00,
payable to the order of Barclays American/Business Credit, Inc.;
2) principal sum of $2,538,000.00, payable to the order of Barclays
American/Business Credit, Inc.; 3) principal sum of $910,000.00, payable to
the order of Barclays American/Business Credit, Inc.; and subject to all
terms, conditions, and provisions contained in said Deed of Trust.
5. UCC Financing Statement filed February 21, 1986, recorded in Volume 86036,
Page 4389, of the Deed of Trust Records, Dallas County, Texas, from Sepco
Industries, Inc., Debtor, to Barclays American/Business Credit, Inc.,
Secured Party. Amendment recorded in Volume 91019, Page ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, and continuation recorded in Volume 91019,
Page 2209, Deed Records, Dallas County, Texas.
6. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4035, of the Deed of Trust Records, Dallas County, Texas, from
Southern Engine and Pump Company, Debtor, to Barclays American/Business
Credit, Inc., Secured Party.
7. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4040, of the Deed of Trust Records, Dallas County, Texas, from
Shoreline Equipment Company,
Attachments to Exhibit G--Page 8
83
Debtor, to Barclays American/Business Credit, Inc., Secured Party.
8. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4045, of the Deed of Trust Records, Dallas County, Texas, from Wesco
Equipment, Inc., Debtor, to Barclays American/Business Credit, Inc.,
Secured Party.
9. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4050, of the Deed of Trust Records, Dallas County, Texas, from Sepco
Industries, Inc., Debtor, to Barclays American/Business Credit, Inc.,
Secured Party.
10. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4055, of the Deed of Trust Records, Dallas County, Texas, from Sepco
International, Inc., Debtor, to Barclays American/Business Credit, Inc.,
Secured Party.
11. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4060, of the Deed of Trust Records, Dallas County, Texas, from Sepco
Power Products, Inc., Debtor, to Barclays American/Business Credit, Inc.,
Secured Party.
12. UCC Financing Statement filed January 6, 1989, recorded in Volume 89004,
Page 4065, of the Deed of Trust Records, Dallas County, Texas, from Sepco
Compression Services, Inc., Debtor, to Barclays American/Business Credit,
Inc., Secured Party.
Attachments to Exhibit G--Page 9
84
ATTACHMENT 6
1. File No. 86-05814 - Collateral Mortgage granted by SEPCO Industries, Inc.
to secure a promissory note in the principal sum of $30,000,000.00 dated
February 10, 1986 before ▇▇▇▇▇▇ ▇▇▇▇▇▇, N.P., filed February 20, 1986. Said
mortgage is payable at BarclaysAmerican/Business Credit, Inc., Dallas,
Texas.
2. Entry No. 343727 - Notice of UCC-1 Filing of the above-referenced
collateral mortgage, filed January 31, 1991.
3. File No. 80-027051 - Servitude Agreement granted by Kol Investment
Corporation to Gulf States Utilities Company. Said servitude is ten feet
in width across the front of the land.
4. File No. 81-010933 - Restrictive Covenants established by Kol Investments
Corporation affecting the area known as Kol Industrial Park, together with
the servitudes for drainage measuring 20 feet in width across the rear of
the land and the ten foot utility servitude across the front of the land as
shown on the plan of resubdivision.
5. File No. 81-013456 - Act of Dedication of Servitudes by Kol Investment
Corporation in favor of the Town of Broussard.
Attachments to Exhibit G--Page 10
85
ATTACHMENT 7
1. MOB 1431, folio 150 - Collateral Mortgage granted by SEPCO Industries, Inc.
in favor of Barclays American/Business Credit, Inc. by act before G.
Gunner, N.P., to secure a promissory note in the principal sum of
$30,000,000.00 dated February 10, 1986, filed February 21, 1986.
2. COB 354, folio 362 - Right of way granted by Southern Engine & Pump Co., to
Louisiana Power & Light Company dated October 26, 1953, filed March 30,
1954 in the office of the Clerk of Court of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
3. The discrepancies between actual and title measurements as shown on a plat
of survey by H.E. ▇▇▇▇▇ dated May 19, 1953 and annexed to an act of sale by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, et al, to Southern Engine & Pump Company.
Attachments to Exhibit G--Page 11
86
ATTACHMENT 8
1. Deed of Trust dated February 10, 1986, executed by SEPCO INDUSTRIES, INC.,
a Texas corporation, to ▇▇▇ ▇. ▇▇▇▇▇▇, Trustee, filed for record in the
Office of the County Clerk of Nueces County, Texas on February 19, 1986,
under Clerk's File No. 478090, Volume 2065, Page 524, Deed of Trust Records
of Nueces County, Texas, payable to the order of BARCLAYS AMERICAN/BUSINESS
CREDIT, INC.
2. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SEPCO INDUSTRIES, INC., as Debtor, filed on March
25, 1986, under Clerk's File No. 483135, Volume 2073, Page 50, Deed of
Trust Records of Nueces County, Texas. Continuation filed on January 30,
1991, under Clerk's File No. 743524, Volume 2433, Page 593, Deed of Trust
Records of Nueces County, Texas. Amendment filed on January 30, 1991, under
Clerk's File No. 743625, Volume 2433, Page 594, Deed of Trust Records of
Nueces County, Texas.
3. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SEPCO COMPRESSION SERVICES, INC., a Debtor, filed on
January 9, 1989; ▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇; Clerk's File No. 646836, Volume 2310,
Page 752, Deed of Trust Records of Nueces County, Texas.
4. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SEPCO POWER PRODUCTS, INC., as Debtor, filed on
January 9, 1989; ▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇; Clerk's File No. 646837, Volume 2310,
Page 755, Deed of Trust Records of Nueces County, Texas.
5. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SEPCO INTERNATIONAL, INC., as Debtor, filed on
January 9, 1989; UCC File No. 213158, Clerk's File No. 646838, Volume 2310,
Page 756, Deed of Trust Records of Nueces County, Texas.
6. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SEPCO INDUSTRIES, INC., as Debtor, filed on January
9, 1989; ▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇; Clerk's File No. 646839, Volume 2310, Page
761, Deed of Trust Records of Nueces County, Texas.
7. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against WESCO EQUIPMENT, INC., as Debtor, filed on January
9, 1989; UCC File No.
Attachments to Exhibit G--Page 12
87
213160; Clerk's File No. 646840, Volume 2310, Page 764, Deed of Trust
Records of Nueces County, Texas.
8. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SOUTHERN ENGINE AND PUMP COMPANY, as Debtor, filed
on January 9, 1989; ▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇; Clerk's File No. 646841, Volume
2310, Page 767, Deed of Trust Records of Nueces County, Texas.
9. Financing Statement filed by BARCLAYS AMERICAN/BUSINESS CREDIT, INC., as
Secured Party, against SHORELINE EQUIPMENT COMPANY, as Debtor, filed on
January 9, 1989; ▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇; Clerk's File No. 646842, Volume 2310,
Page 770, Deed of Trust Records of Nueces County, Texas.
Attachments to Exhibit G--Page 13
88
ATTACHMENT 9
1. The subject property is located within the City of Houston or within its
extra territorial jurisdiction (within 5 miles of the city limits but
outside another municipality) it is subject to the terms, conditions and
provisions of City of Houston Ordinance No. 85-1878, pertaining to, among
other things, the platting and re-platting of real property and to the
establishment of building lines (25 feet along major thoroughfares and 10
feet along other streets). A certified copy of said ordinance was filed for
record on August 1, 1991, under ▇▇▇▇▇▇ County Clerk's File No. N253886.
Attachments to Exhibit G--Page 14
89
ATTACHMENT 10
1. None.
Attachments to Exhibit G--Page 15
90
ATTACHMENT 11
1. State Tax Lien dated August 23, 1991, filed September 3, 1991 of record in
Volume 295, Page 209, Official Records, Matagorda County, Texas.
2. Assumption Deed dated September 22, 1981, filed September 24, 1981,
recorded in Volume 686, Page 713, Deed Records of Matagorda County, Texas
from H P ▇▇▇▇▇▇▇▇ & wf ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to ▇ ▇ ▇▇▇▇▇▇ Bearing Company.
3. Deed of Trust dated September 22, 1981, filed September 24, 1981 recorded
in Volume 188, Page 143, Deed of Trust Records of Matagorda County, Texas
from ▇ ▇ ▇▇▇▇▇▇ Bearing Company by ▇▇▇▇▇▇▇ ▇ ▇▇▇▇, President to ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, Trustee for H P ▇▇▇▇▇▇▇▇ & wf ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the amount of
$28,962.74.
4. Deed of Trust to Secure Assumption dated September 22, 1981, filed
September 24, 1981 recorded in Volume 188, Page 138, Deed of Trust Records
of Matagorda County, Texas from ▇ ▇ ▇▇▇▇▇▇ Bearing Company, A Corporation
to ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇, Trustee for H P ▇▇▇▇▇▇▇▇▇▇ & wf ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
covering all principal & interest remaining unpaid upon that note for
$65,000.00 dated March 20, 1979 executed by ▇ ▇ ▇▇▇▇▇ et ux ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
payable to Bay City Federal Savings & Loan Association of record in Volume
168, Page 302, Deed of Trust Records.
Attachments to Exhibit G--Page 16
91
ATTACHMENT 12
1. All minerals reserved in Deed dated 5-17-66 filed 5-19-66 recorded in
Vol. 1467 page 140 Deed Records of Jefferson County, Texas.
2. All minerals reserved in Deed dated 5-17-66 filed 5-19-66 recorded in
Vol. 1467 page 121 Deed Records of Jefferson County, Texas.
3. Oil and gas lease in favor of ▇. ▇. ▇▇▇▇▇, dated August 24, 1950, filed
March 22, 1951, in Volume 804, Page 432, Deed Records of Jefferson County,
Texas.
4. Oil and gas lease in favor of H. E. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, dated
February 12, 1951, filed March 28, 1951, in Volume 805, Page 304, Deed
Records of Jefferson County, Texas.
5. Fence encroachment as shown on survey prepared by ▇▇▇▇ ▇▇▇▇▇, Registered
Professional Surveyor, dated September 25, 1984.
Attachments to Exhibit G--Page 17
92
EXHIBIT H
FORM OF OPINION OF BORROWER'S COUNSEL
(To Be Placed on Borrower's Counsel's Stationery)
April 1, 1994
Barclays Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Barclays Business Credit, Inc. Loan to Sepco Industries, Inc.
("Borrower")
Gentlemen:
We have represented Borrower, Sepco Power Products, Inc. ("Sepco
Power"), Sepco Compression Services, Inc. ("Compression"), ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee (Borrower, Sepco Power, Compression, ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee, are collectively called the "Sepco Parties" and
individually, a "Sepco Party") in connection with extensions of credit by
Barclays Business Credit, Inc. ("Lender") to Borrower. In connection with such
transaction, our firm has been requested by Lender to render an opinion to
Lender relative to certain matters. Terms used but not defined in this opinion
letter shall have the meanings assigned to them in the Loan Agreement (as such
term is defined below).
In rendering the following opinion, we have examined copies of the
following documents:
1. Second Amended and Restated Loan and Security Agreement between
Borrower and Lender dated as of the date hereof (the "Loan Agreement").
2. Secured Promissory Note (Real Estate Loan) in the original
principal amount of $1,329,277.37 dated as of the date hereof from Borrower to
Lender (the "Term Note").
3. Pledge Agreement dated as of the date hereof between ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustee for the benefit of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇ Little 1988 Trusts and Lender.
Exhibit H--Page 1
(Opinion)
93
Barclays Business Credit, Inc.
April 1, 1994
Page 2
4. Unconditional Guaranty dated as of the date hereof from ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ for the benefit of Lender relating to Borrower.
5. Unconditional Guaranty dated as of the date hereof from Sepco
Power for the benefit of Lender.
6. Unconditional Guaranty dated as of the date hereof from
Compression for the benefit of Lender.
7. Deceptive Trade Practices Act Waiver dated as of the date hereof
executed by the Sepco Parties.
The above-described documents are at times hereinafter collectively
referred to as the "Operative Documents". Borrower, Sepco Power and
Compression are referred to herein as the "Corporate Parties").
As counsel for each of the Corporate Parties, we have also examined
copies of the Articles/Certificate of Incorporation of each of the Corporate
Parties and all amendments thereto which have been duly filed, and the Bylaws
of each of the Corporate Parties, as amended to date. We are familiar with the
proceedings of each of the Corporate Parties with respect to the authorization,
execution, and delivery of the Operative Documents executed by them and the
transactions contemplated thereby. In addition to the foregoing, we have
examined and relied upon such other matters of law, documents, certificates,
and statements of public officials and certificates and representations of the
Corporate Parties as we have deemed relevant to rendering our opinion. In all
of our examinations, we have assumed the accuracy of all information furnished
to us (and nothing has come to our attention that would lead us to question the
accuracy of such information), the genuineness of all documents submitted to us
as original or certified documents, the conformity to original or certified
documents of all copies submitted to us as conformed or photostatic copies and
the genuineness of all signatures on all documents not signed in our presence.
On the basis of the foregoing, we are of the opinion that:
(a) Each of the Corporate Parties is a corporation duly organized
and existing in good standing under the laws of the state of its incorporation.
Exhibit H--Page 2
(Opinion)
94
Barclays Business Credit, Inc.
April 1, 1994
Page 3
(b) Borrower is duly qualified and licensed as a foreign corporation
in each state where the nature of its business or properties requires such
qualification.
(c) Each of the Corporate Parties has full power and authority to
execute, deliver and perform its obligations under the Operative Documents to
which it is a party. The transactions between each of the Corporate Parties
and Lender contemplated by the Operative Documents have been duly authorized by
all necessary corporate proceedings of each of the Corporate Parties. Each of
the Corporate Parties and its officers executing such Operative Documents to
which it is a party have been duly authorized to execute and deliver to Lender
such Operative Documents and any other documents required to obtain and secure
the credit being extended.
(d) The Operative Documents have been duly executed and delivered on
behalf of each Sepco Party that is a party thereto and the Operative Documents
constitute legal, valid and binding obligations of each Sepco Party that is a
party thereto and may be enforced in accordance with their terms except as may
be limited by bankruptcy, reorganization, moratorium, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
(e) To the best of our knowledge, there is no action, suit,
investigation or proceeding pending or threatened against any Sepco Party or any
of its properties before any court or administrative agency which, if adversely
determined, would result in a materially adverse change in the business or
condition of any Sepco Party.
(f) To the best of our knowledge, no Corporate Party is in default
under the provisions of any instruments evidencing any obligation for borrowed
money or of any agreement relating thereto, or in default under or in violation
of any order, writ, injunction or decree of any court, or any order, regulation
or demand of any administrative or governmental instrumentality which default or
violation might have consequences which would materially and adversely affect
its business or properties.
(g) The execution and delivery of the Operative Documents and the
consummation of the transactions therein contemplated and the fulfillment of and
compliance with the respective terms, conditions, and provisions thereof or of
any
Exhibit H--Page 3
(Opinion)
95
Barclays Business Credit, Inc.
April 1, 1994
Page 4
instruments required thereby will not conflict with or result in a breach of
any of the terms, conditions or provisions of, the Articles/Certificate of
Incorporation, any bylaw or any law, rule or regulation of any administrative
or governmental instrumentality applicable to any Corporate Party or, to the
best of our knowledge, of any writ, injunction or decree of any court, or, to
the best of our knowledge, the terms, conditions or provisions of any agreement
or instrument to which any Corporate Party is a party or by which any Corporate
Party is bound or to which it is subject.
(h) Other than the filing of financing statements, deeds of trust and
mortgages to perfect Liens, no registration with or authorization, consent,
order or approval of any federal, state or other governmental authority or
regulatory body is required with respect to any Sepco Party in connection with
the execution and delivery of the Operative Documents, the consummation of the
transactions therein contemplated, and/or the fulfillment of and compliance with
the respective terms, conditions and provisions thereof or any of the
instruments required thereby.
(i) We understand that Lender has filed or soon will file financing
statements, copies of which have been examined by us, covering Borrower's
accounts receivable, equipment, fixtures, chattel paper, documents, instruments,
general intangibles, contracts, contract rights, inventory and the proceeds and
products of such items. Assuming that Lender gives value to Borrower and duly
files the financing statements in the form reviewed by us with the Secretary of
the State of Texas, Lender will thereupon have a duly perfected security
interest in all of the above-described property and the proceeds and products
thereof to the extent that the property is owned by Borrower and a security
interest may be taken and perfected by filing in Texas under the Uniform
Commercial Code of Texas.
(j) Borrower has no direct Subsidiaries other than __________________.
(k) No taxes, including, without limitation, intangible or documentary
stamp taxes, mortgage taxes, transfer taxes or similar charges, are payable to
the State of Texas, or any political subdivision thereof, or to any other
jurisdiction in which Borrower conducts its business, on account of the
execution or delivery of the Operative Documents, or the
Exhibit H--Page 4
(Opinion)
96
Barclays Business Credit, Inc.
April 1, 1994
Page 5
creation of the indebtedness evidenced or secured by any of the foregoing or the
recording or filing of any of the foregoing, except for nominal filing or
recording fees.
(1) The compensation contracted for in the Operative Documents
constitutes lawful interest, and the Operative Documents do not violate any laws
of the State of Texas relating to interest or usury, and will not violate any
such law by virtue of any fluctuations in any base, prime, index or equivalent
rate or rates on which interest charged may be based under such agreements.
Yours very truly,
By:
----------------------------
Exhibit H--Page 5
(Opinion)
97
Sepco Industries, Inc.
Exhibit I
Schedule of Existing Loans and advance to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
1. Interest Bearing Note $137,635.00
2. Interest Bearing Note 53,927.00
3. Non Interest Bearing Note 227,000.00
4. Interest Bearing Note (Stk) 210,939.00
5. Miscellaneous Advances 35,734.00
-----------
$665,235.00
===========
Explanation:
1. Original note was $149,910 of which $138,000 existed at time ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
purchased Sepco and was secured by stock of Sepco. Subsequent to stock
transfer to Little's children's trust Sepco accepted equity interest in
Little's home as collateral. Monthly principal and interest payments of
$1348.78 due the 1st of each month.
2. Original note of $58,737 originated in July 1990. Proceeds used by ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ for settlement of amount due at Texas American Bank for activities
related to Tryit Enterprises. Principal and interest payment of $528.47 due
the 1st of each month.
3. Advance made to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in April of 1992 for payment of personal
income tax. Tax liability resulted from income generated by dissolution of
Tryit related entities. Income to partners was created with no cash proceeds
for payment of taxes.
4. Interest bearing note created in December, 1993 for purpose of selling five
percent of Sepco to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Interest only payments due in December
of each year.
5. Miscellaneous advances made to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
98
Sepco Industries, Inc.
Exhibit J
Schedule of Amount Due Stock Acquisition Debt
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 4770.00
▇▇▇▇▇▇ ▇▇▇▇ 1060.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1360.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5730.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10,906.54
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 27,216.32
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 17,210.32
----------
Total $68,253.18
==========
Note: Notes originated with employee listed above for purpose of allowing
various employees to acquire Sepco stock through a non qualified stock plan.
Notes require yearly interest payment.
99
FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT AND
SECURED PROMISSORY NOTE
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT AND SECURED PROMISSORY NOTE ("this Amendment") is made and entered
into this ____ day of May, 1995, by and between SEPCO INDUSTRIES, INC., a Texas
corporation ("Borrower"), and SHAWMUT CAPITAL CORPORATION, a Connecticut
corporation and successor-in-interest by assignment to Barclays Business
Credit, Inc. ("Lender").
RECITALS
A. Borrower and Lender have entered into that certain Second
Amended and Restated Loan and Security Agreement, dated as of April 1, 1994
(the "Loan Agreement").
B. In connection with the Loan Agreement, Borrower executed that
certain Secured Promissory Note (Real Estate Loan) dated April 1, 1994 (the
"Term Note"), in the original principal amount of $1,329,277.37, payable to the
order of Lender.
C. Borrower and Lender desire to amend the Loan Agreement, the
Term Note and the Other Agreements as hereinafter 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, intending to be legally bound, agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the
Loan Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
Effective as of the date hereof, the Loan Agreement is hereby amended
as follows:
2.01 AMENDMENT TO SECTION 1.1; ADDITION OF CERTAIN DEFINITIONS.
Section 1.1 of the Loan Agreement is hereby amended by adding the following new
definitions thereto, in the proper alphabetical order:
-1-
100
"First Amendment - the First Amendment to Second Amended and Restated
Loan and Security Agreement and Secured Promissory Note dated as of
May ___, 1995 by and between Borrower and Lender.
Eurodollar Base Rate - with respect to a Eurodollar Loan for the
relevant Eurodollar Interest Period, a rate per annum equal to the
quotient of the following: (a) the rate at which deposits in U.S.
dollars in immediately available funds are offered by Lender or Bank
to first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day
of such Eurodollar Interest Period, in the approximate amount of the
Eurodollar Loan and having a maturity approximately equal to the
Eurodollar Interest Period divided by (b) the difference of 1.00 minus
the Eurodollar Reserve Requirement.
Eurodollar Borrowing Notice - as defined in Section 3.7(A) of this
Agreement.
Eurodollar Interest Period- with respect to a Eurodollar Loan, a
period of one (1), two (2), three (3) or six (6) months commencing on
a Business Day selected by Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which
corresponds numerically to such date one (1), two (2), three (3) or
six (6) months thereafter, provided, however, that if there is no such
numerically corresponding day in such first (1st), second (2nd), third
(3rd) or sixth (6th) succeeding month, such Eurodollar Interest Period
shall end on the last Business Day of such first (1st), second (2nd),
third (3rd) or sixth (6th) succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day
falls in a new month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day.
Eurodollar Loan - a Revolving Credit Loan which bears interest at a
Eurodollar Base Rate.
Eurodollar Reserve Requirement- on any day, means that percentage
(expressed as a decimal fraction) which is in effect on such day, as
provided by the Board of Governors of the Federal Reserve System (or
any successor governmental body) applied for determining the maximum
reserve requirements (including without limitation, basic,
supplemental, marginal and emergency reserves) under Regulation D with
respect to "eurocurrency liabilities" as currently defined in
Regulation D, or under any similar or successor regulation with
respect to eurocurrency liabilities or eurocurrency funding. Each
determination by Lender of the Eurodollar Reserve Requirement shall,
in the absence of manifest error, be conclusive and binding."
2.02 AMENDMENT TO DEFINITION OF "BANK" IN SECTION 1.1. The
definition of "Bank" in Section 1.1 of the Loan Agreement is hereby amended by
deleting the reference to "Barclays Bank PLC" therefrom and substituting
"Shawmut Bank Connecticut, N.A." in lieu thereof.
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101
2.03 AMENDMENT TO SECTION 1.1; DELETION OF DEFINITION. Section 1.1
of the Loan Agreement is hereby amended by deleting the definition of
"Applicable Margin" therefrom.
2.04 AMENDMENT TO SECTION 3.1(A); INTEREST AND CHARGES. Subsection
3.1(A) of the Loan Agreement is hereby deleted in its entirety and the
following is hereby substituted therefor:
"(A) Interest shall accrue on the outstanding principal on the Term
Loan in accordance with the terms of the Term Note, and the
outstanding principal on the Revolving Credit Loans shall bear
interest, calculated daily, at the following rates per annum
(individually called, as applicable, an "Applicable Annual Rate"):
(i) Eurodollar Loans shall bear interest at a rate per annum equal to
3.25% above the Eurodollar Base Rate for the Eurodollar Interest
Period applicable thereto and (ii) all other Revolving Credit Loans
shall bear interest at a rate per annum equal to .75% above the Base
Rate. Revolving Credit Loans shall bear interest at a rate per annum
equal to .75% above the Base Rate unless the Borrower provides a
Eurodollar Borrowing Notice to the Lender in accordance with Section
3.7(A) irrevocably electing that all or a portion of the Revolving
Credit Loans are to bear interest at a Eurodollar Base Rate. Each
Revolving Credit Loan that is not a Eurodollar Loan shall be increased
or decreased, as the case may be, by an amount equal to any increase
or decrease in the Base Rate, with such adjustments to be effective as
of the opening of business on the day that any such change in the Base
Rate becomes effective. The Base Rate in effect on the date hereof
shall be the Base Rate effective as of the opening of business on the
date hereof, but if this Agreement is executed on a day that is not a
Business Day, the Base Rate in effect on the date hereof shall be the
Base Rate effective as of the opening of business on the last Business
day immediately preceding the date hereof. Interest shall be
calculated on a daily basis (computed on the actual number of days
elapsed over a year of 360 days), commencing on the date hereof, and
shall be payable monthly, in arrears, on the first day of each month;
provided, however, that interest at the Maximum Legal Rate shall be
computed on the actual number of days elapsed over a year of 365 or
366 days, as the case may be. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal
amount of the Obligations shall bear interest at the lesser of (i) the
Maximum Legal Rate or (ii) a fluctuating rate per annum, calculated
daily (computed on the actual days elapsed over a year of 360 days),
equal to 4.0% above the Applicable Annual Rate or other applicable
rate of interest (the "Default Rate").
2.05 AMENDMENT TO SECTION 3.1; DELETION OF SUBSECTION. Section 3.1
of the Loan Agreement is hereby amended by deleting Subsection 3.1(F) in its
entirety therefrom.
2.06 AMENDMENT TO SUBSECTION 3.1(C). The fourth sentence of
Subsection 3.1(C) of the Loan Agreement is hereby deleted in its entirety and
the following is hereby substituted therefor:
"Borrower recognizes that, with fluctuations in the Base Rate, the
Eurodollar Base Rate and the Maximum Legal Rate, such a result could
inadvertently occur."
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102
2.07 AMENDMENT TO ARTICLE III; ADDITION OF SECTIONS. Article III
of the Loan Agreement is hereby amended by adding new Sections 3.7 and 3.8
thereto which shall read as follows:
"3.7. Additional Provisions Regarding Eurodollar Loans.
(A) Manner of Borrowing a Eurodollar Loan.
Borrower shall give Lender notice of its intention to
borrow a Eurodollar Loan in the form of Annex B to
the First Amendment (a "Eurodollar Borrowing
Notice"), in which notice Borrower shall specify (x)
the aggregate amount of such Eurodollar Loan, (y) the
requested date of such Eurodollar Loan, and (z) the
Eurodollar Interest Period applicable thereto.
Borrower shall give Lender the Eurodollar Borrowing
Notice at least two (2) Business Days prior to the
requested date of the Eurodollar Loan. With respect
to such Eurodollar Loans, (i) each Eurodollar Loan
shall be in an integral multiple of $1,000,000, (ii)
no more than four (4) Eurodollar Interest Periods may
be in existence at any one time, and (iii) Borrower
may not request a Eurodollar Loan if there exists a
Default or Event of Default. The Borrower shall
select Eurodollar Interest Periods with respect to
Eurodollar Loans so that no Eurodollar Interest
Period expires after the end of the Original Term, or
if extended pursuant to Section 3.3(A), any Renewal
Term. An outstanding Revolving Credit Loan may be
converted to a Eurodollar Loan at any time subject to
the provisions of this Section 3.7.
(B) Interest on Eurodollar Loans. Each
Eurodollar Loan shall bear interest from and
including the first day of the Eurodollar Interest
Period applicable thereto (but not including the last
day of such Eurodollar Interest Period) at the
interest rate determined as applicable to such
Eurodollar Loan, but interest on such Eurodollar Loan
shall be payable as provided in Section 3.4. If at
the end of a Eurodollar Interest Period for an
outstanding Eurodollar Loan, Borrower has failed to
deliver to Lender a new Eurodollar Borrowing Notice
with respect to such Eurodollar Loan or to pay such
Eurodollar Loan, then such Eurodollar Loan shall be
converted to a Revolving Credit Loan bearing interest
at a rate, and subject to all other terms and
conditions of this Agreement, applicable to Revolving
Credit Loans not constituting Eurodollar Loans on and
after the last day of such Eurodollar Interest Period
until paid or until the effective date of a new
Eurodollar Borrowing Notice with respect thereto.
(C) Availability of Eurodollar Loans. If Lender
determines that maintenance of any of its Eurodollar
Loans would violate any applicable law, rule,
regulation or directive, whether or not having the
force of law, Lender shall suspend the availability
of Eurodollar Loans and require any Eurodollar Loans
outstanding to be repaid (provided, that, without in
any
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103
way impairing Borrower's obligations under Section
3.7(D) and Section 3.7(E), to the extent that
Borrower is entitled to request a Revolving Credit
Loan bearing interest at the Base Rate, Borrower may
request such a Revolving Credit Loan in order to
repay the Eurodollar Loans); or if Lender determines
that (x) deposits of a type or maturity appropriate
to match fund Eurodollar Loans are not available or
(y) the Eurodollar Base Rate does not accurately
reflect the cost of making a Eurodollar Loan, then
Lender shall suspend the availability of Eurodollar
Loans after the date of any such determination.
(D) Funding Indemnification. If any payment of a
Eurodollar Loan occurs on a date which is not the
last day of the applicable Eurodollar Interest
Period, whether because of acceleration, prepayment
or otherwise, or a Eurodollar Loan is not made on the
date specified by Borrower because Borrower has not
satisfied the conditions precedent to such Eurodollar
Loan contained in this Agreement or has otherwise
breached the terms of this Agreement, Borrower will
indemnify Lender for any loss or cost incurred by it
resulting therefrom, including without limitation any
loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Loan.
(E) Lender Statements: Survival of Indemnity.
Within sixty (60) days of the date upon which Lender
suspends the availability of Eurodollar Loans under
Section 3.7(C) hereof or learns of any loss or cost
for which Borrower has indemnified Lender under
Section 3.7(D) hereof, Lender shall deliver a written
statement as to the amount due under Section 3.7(C)
or (D). Such written statement shall set forth in
reasonable detail the calculations and basis therefor
upon which Lender determined such amount and shall be
final, conclusive and binding on Borrower in the
absence of manifest error. Determination of amounts
payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though the
Lender funded its Eurodollar Loan through the
purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in
determining the Eurodollar Base Rate applicable to
such Eurodollar Loan whether in fact that is the case
or not. Unless otherwise provided herein, the amount
specified in the written statement shall be payable
on demand after receipt by Borrower of the written
statement.
3.8. Yield Protection. If either (i) the adoption of any
applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by Lender with any request or directive (whether or
not having the force of law) of any such authority, central
bank or comparable agency shall subject Lender to any tax
(including without limitation any United States interest
equalization or similar
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104
tax, however named), duty or other charge with respect to any
Eurodollar Loan or Lender's obligation to compute interest on
the principal balance of any Eurodollar Loan at a rate based
upon the Eurodollar Base Rate, or shall change the basis of
taxation of payments to Lender of the principal of or interest
on any Eurodollar Loan or any other amounts due under this
Agreement in respect of any Eurodollar Loan or Lender's
obligation to compute the interest on the principal balance of
any Eurodollar Loan at a rate based upon the Eurodollar Base
Rate, or (ii) any governmental authority, central bank or
other comparable authority shall at any time impose, modify or
deem applicable any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended
by, Lender, or shall impose on Lender (or its eurodollar
lending office) or any relevant interbank eurodollar market
any other condition affecting any Eurodollar Loan or Lender's
obligation to compute the interest on the principal balance of
any Eurodollar Loan at a rate based upon the Eurodollar Base
Rate; and the result of any of the foregoing is to increase
the cost to Lender of maintaining any Eurodollar Loans, or to
reduce the amount of any sum received or receivable by Lender
under this Agreement by an amount deemed by Lender to be
material, then upon demand by Lender, Borrower shall pay to
Lender such additional amount or amounts as will compensate
Lender for such increased cost or reduction. Lender will
promptly notify Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle
Lender to compensation pursuant to this Section 3.8. A
certificate of Lender claiming compensation under this Section
3.8 and setting forth the additional amount or amounts to be
paid to Lender hereunder shall be conclusive in the absence of
manifest error."
2.08 AMENDMENT TO REFERENCES TO "ANNUAL RATE". The Loan Agreement
is hereby amended by deleting any and all references to "Annual Rate" therefrom
and substituting "Applicable Annual Rate" in lieu thereof.
2.09 REFERENCES TO "BARCLAYS BUSINESS CREDIT, INC.". The Loan
Agreement and the Other Agreements are hereby amended by deleting any and all
references to "Barclays Business Credit, Inc." therefrom and substituting
"Shawmut Capital Corporation" in lieu thereof.
ARTICLE III
AMENDMENTS TO TERM NOTE
Effective as of the date hereof, the Term Note is hereby amended as
follows:
3.01 AMENDMENT TO INTEREST RATE. The first full paragraph on page 1
of the Term Note is hereby amended by deleting the reference to "1.50%"
contained therein and substituting "1.00%" in lieu thereof.
ARTICLE IV
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105
CONDITIONS PRECEDENT
4.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent,
unless specifically waived in writing by Lender:
(a) Lender shall have received this Amendment, duly
executed by Borrower together with such additional documents, instruments and
information as Lender or its legal counsel may request;
(b) The representations and warranties contained herein
and in the Loan Agreement and the Other Agreements, as each is amended hereby,
shall be true and correct as of the date hereof, as if made on the date hereof;
(c) No Default or Event of Default shall have occurred
and be continuing, unless such Default or Event of Default has been
specifically waived in writing by Lender; and
(d) 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.
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 the Other Agreements, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the Other Agreements are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the Loan
Agreement and the Other Agreements, 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 (a) the execution, delivery and performance of this
Amendment and any and all Other Agreements 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; (b) attached hereto as Annex A is a true, correct and
complete copy of presently effective resolutions of Borrower's Board of
Directors authorizing the execution, delivery and performance of this Amendment
and any and all Other Agreements executed and/or delivered in connection
herewith, certified by the Assistant Secretary of Borrower; (c) the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any Other Agreement are true and correct on and as of the date
hereof and on and as of the date of execution hereof as though made on and as
of each such date; (d) no Default or Event of Default under the Loan Agreement,
as amended hereby, has occurred and is continuing, unless such Default or Event
of Default has been specifically waived in writing by Lender; (e)
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106
Borrower is in full compliance with all covenants and agreements contained in
the Loan Agreement and the Other Agreements, as amended hereby; and (f)
Borrower has not amended its Articles of Incorporation or its Bylaws since the
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
Agreement, including, without limitation, any document furnished in connection
with this Amendment, shall survive the execution and delivery of this Amendment
and the Other Agreements, 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 Agreement and
the Other Agreements, 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 the Loan Agreement and such Other
Agreements 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 costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the Other Agreements 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 Loan Agreement, as amended hereby, or any Other Agreements,
including, without, limitation, the 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.
6.05 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 that Borrower may not assign or transfer any of
its rights or obligations hereunder without the prior written consent of
Lender.
6.06 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.
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107
6.07 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
by Borrower shall be deemed a consent to or waiver of any other breach of the
same or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER AGREEMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, 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. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND LENDER.
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.
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108
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BORROWER"
SEPCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
"LENDER"
SHAWMUT CAPITAL CORPORATION,
SUCCESSOR-IN-INTEREST BY
ASSIGNMENT TO BARCLAYS
BUSINESS CREDIT, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ANNEXES:
A - Certified Resolutions of Borrower's Board of Directors
B - Eurodollar Borrowing Notice
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109
ANNEX A
CERTIFIED RESOLUTIONS OF BORROWER'S BOARD OF DIRECTORS
RESOLVED: That any officer of Sepco Industries, Inc., a Texas
corporation (the "Corporation"), acting alone, by his signature be, and the
same hereby is, authorized and directed, in the name of and on behalf of the
Corporation (a) to amend the Corporation's existing Second Amended and Restated
Loan and Security Agreement by and between the Corporation and Barclays
Business Credit, Inc., predecessor-in-interest to Shawmut Capital Corporation
("Lender"), (b) to execute and deliver to Lender with such changes in the terms
and provisions thereof as the officer executing same shall, in his sole
discretion, deem advisable, (i) a certain proposed First Amendment to Second
Amended and Restated Loan and Security Agreement and Term Note, a draft of each
of which has been reviewed and discussed by the Board of Directors of the
Corporation, and (ii) such other agreements, instruments, statements and
writings as the officer or officers executing the same may deem desirable or
necessary in connection therewith, and (c) to perform such other acts as the
officer or officers performing such acts on behalf of the Corporation may deem
desirable or necessary in connection therewith; and be it
FURTHER RESOLVED: That said agreements will benefit the Corporation,
both directly and indirectly, and are in the best interests of the Corporation;
and be it
FURTHER RESOLVED: That said agreements and other statements in
writing executed in the name and on behalf of the Corporation by any officer of
the Corporation shall be presumed conclusively to be the instruments, the
execution of which is authorized by these resolutions; and be it
FURTHER RESOLVED: That the officers of the Corporation be, and the
same hereby are, authorized and directed to execute, in the name of and on
behalf of the Corporation, security agreements, financing statements,
assignments, collateral reports, loan statements, confirmations of delivery,
lien statements, pledge certificates, release certificates, removal reports,
guaranties, cross- collateralization agreements and such other writings and to
take such other actions as are necessary in their dealings with Lender, and any
such papers executed and any such actions taken by any of them prior to this
time are approved, ratified and confirmed; and be it
FURTHER RESOLVED: That the Secretary or any Assistant Secretary of
the Corporation, by the signature of any one or more of them, be, and the same
hereby are, authorized and directed to attest the execution by the Corporation
of the papers signed pursuant to these resolutions, to affix the seal of the
Corporation thereto, if required by Lender, and to certify to Lender the
adoption of these resolutions.
ANNEX A - Page 1 of 2
110
CERTIFICATION
The undersigned hereby certifies that the within and foregoing
resolutions are in effect as of the date hereof, without modification, and that
the person signing the within and foregoing Amendment on behalf of the
Corporation is the duly elected officer stated below his name, that he is
authorized to sign such Amendment, and that his signature thereon is genuine.
DATED: May ___, 1995.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A - Page 2 of 2
111
ANNEX B
FORM OF EURODOLLAR BORROWING NOTICE
This Eurodollar Borrowing Notice is executed and delivered to Shawmut
Capital Corporation, successor-in-interest by assignment to Barclays Business
Credit, Inc. ("Lender"), by the undersigned officer of Sepco Industries, Inc.,
a Texas corporation ("Borrower"), this ____ day of __________________,
19______, pursuant to Section 3.7(A) of that certain Second Amended and
Restated Loan and Security Agreement, dated April 1, 1994 (together with any
and all renewals, modifications, extensions and amendments thereof, the "Loan
Agreement"), between Borrower and Lender. All capitalized terms not otherwise
defined herein shall have the definitions assigned to such terms in the Loan
Agreement.
1. Outstanding principal
amount of Revolving Credit Loans $______________
2. Borrowing Base as of
, 19 (within
------------- --
Business Days of the
----
date hereof) $______________
3. Amount of Eurodollar
Loan requested $______________
4. Date Eurodollar Loan is requested _________, 19___
5. The Eurodollar Interest Period _______________
In connection with the foregoing Eurodollar Loan and pursuant to the
terms and provisions of the Loan Agreement, the undersigned hereby certifies
that:
(i) The undersigned is the duly elected, qualified and
acting officer of Borrower specified below and as such officer is
authorized to make and deliver this certificate.
(ii) The representations and warranties contained in
Section 8 of the Loan Agreement and in each of the Other Agreements
are true and correct in all material respects on and as of the date
hereof with the same force and effect as though made on and as of the
date hereof.
(iii) No Default or Event of Default has occurred and is
continuing or will exist after giving effect to the Eurodollar Loan
requested hereby.
ANNEX B - Page 1 of 2
112
(iv) The Loans will not, after giving effect to the
Eurodollar Loan requested hereby, exceed the amount permitted by
Section 2.1 of the Loan Agreement.
(v) Enclosed herewith is a Borrowing Base Certificate
prepared as of a date not more than _____ Business Days prior to the
date hereof.
EXECUTED and delivered this _____ day of _____________________,
19______.
By:
------------------------------------
Its:
------------------------------------
ANNEX B - Page 2 of 2
113
CONSENT AND RATIFICATION
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, has executed that certain Amended
and Restated Unconditional Guaranty dated September 16, 1994 (the "Guaranty"),
in favor of BARCLAYS BUSINESS CREDIT, INC., predecessor-in-interest to SHAWMUT
CAPITAL CORPORATION ("Lender"). The undersigned hereby (i) consents and agrees
to the terms of the First Amendment to Second Amended and Restated Loan and
Security Agreement and Term Note dated as of May ___, 1995 (the "Loan
Amendment"), between Sepco Industries and Lender, a copy of which has been
reviewed by the undersigned, and (ii) agrees that the Guaranty shall remain in
full force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a)
the obligations, indebtedness and liabilities arising in connection with the
Loan Amendment comprise some, but not all, of the "Obligations" as such term is
used in the Guaranty, (b) the Guaranty is an "Other Agreement" as such term is
defined in the Loan Agreement, (c) the Guaranty, is not as of this date subject
to any claims, defenses or offsets, (d) nothing contained in the Loan Agreement
or any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: May ___, 1995.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually
114
CONSENT AND RATIFICATION
The undersigned, ▇. ▇. ▇▇▇▇▇▇ BEARING CO., has executed that certain
Amended and Restated Unconditional Guaranty dated September 16, 1994 (the
"Guaranty"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to SHAWMUT CAPITAL CORPORATION ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the First Amendment
to Second Amended and Restated Loan and Security Agreement and Term Note dated
as of May ___, 1995 (the "Loan Amendment"), between Sepco Industries and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that the Guaranty shall remain in full force and effect and shall continue to
be the legal, valid and binding obligation of the undersigned enforceable
against it in accordance with its terms. Furthermore, the undersigned hereby
agrees and acknowledges that (a) the obligations, indebtedness and liabilities
arising in connection with the Loan Amendment comprise some, but not all, of
the "Obligations" as such term is used in the Guaranty, (b) the Guaranty is an
"Other Agreement" as such term is defined in the Loan Agreement, (c) the
Guaranty, is not as of the date hereof subject to any claims, defenses or
offsets, (d) nothing contained in the Loan Agreement or any Other Agreement
entered into prior to or as of the date hereof shall adversely affect any right
or remedy of Lender under the Guaranty, and (e) the execution and delivery of
the Loan Amendment shall in no way reduce, impair or discharge any obligations
of the undersigned as guarantor pursuant to the Guaranty and shall not
constitute a waiver by Lender of any of Lender's rights against the
undersigned.
Dated: May ___, 1995.
▇. ▇. ▇▇▇▇▇▇ BEARING CO.
By:
-------------------------------------
Name:
-----------------------------------
115
CONSENT AND RATIFICATION
The undersigned, SOUTHERN ENGINE & PUMP COMPANY, has executed that
certain Amended and Restated Unconditional Guaranty dated September 16, 1994
(the "Guaranty"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to SHAWMUT CAPITAL CORPORATION ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the First Amendment
to Second Amended and Restated Loan and Security Agreement and Term Note dated
as of May ___, 1995 (the "Loan Amendment"), between Sepco Industries and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that the Guaranty shall remain in full force and effect and shall continue to
be the legal, valid and binding obligation of the undersigned enforceable
against it in accordance with its terms. Furthermore, the undersigned hereby
agrees and acknowledges that (a) the obligations, indebtedness and liabilities
arising in connection with the Loan Amendment comprise some, but not all, of
the "Obligations" as such term is used in the Guaranty, (b) the Guaranty is an
"Other Agreement" as such term is defined in the Loan Agreement, (c) the
Guaranty, is not as of the date hereof subject to any claims, defenses or
offsets, (d) nothing contained in the Loan Agreement or any Other Agreement
entered into prior to or as of the date hereof shall adversely affect any right
or remedy of Lender under the Guaranty, and (e) the execution and delivery of
the Loan Amendment shall in no way reduce, impair or discharge any obligations
of the undersigned as guarantor pursuant to the Guaranty and shall not
constitute a waiver by Lender of any of Lender's rights against the
undersigned.
Dated: May ____, 1995.
SOUTHERN ENGINE & PUMP COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
116
CONSENT AND RATIFICATION
The undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇ LITTLE 1988 TRUSTS, has executed that
certain Amended and Restated Pledge Agreement dated September 16, 1994 (the
"Pledge Agreement"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to SHAWMUT CAPITAL CORPORATION ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the First Amendment
to Second Amended and Restated Loan and Security Agreement and Term Note dated
as of May ___, 1995 (the "Loan Amendment"), executed by Sepco Industries, Inc.
and Lender, a copy of which has been reviewed by the undersigned, and (ii)
agrees that the Pledge Agreement shall remain in full force and effect and
shall continue to be the legal, valid and binding obligation of the undersigned
enforceable against it in accordance with its terms. Furthermore, the
undersigned hereby agrees and acknowledges that (a) the obligations,
indebtedness and liabilities arising in connection with the Loan Amendment
comprise some, but not all, of the "Secured Indebtedness" as such term is used
in the Pledge Agreement, (b) the Pledge Agreement is an "Other Agreement" as
such term is defined in the Loan Agreement, (c) the Pledge Agreement, is not as
of the date hereof subject to any claims, defenses or offsets, (d) nothing
contained in this Agreement or any Other Agreement entered into prior to or as
of the date hereof shall adversely affect any right or remedy of Lender under
the Pledge Agreement, and (e) the execution and delivery of the Loan Amendment
shall in no way reduce, impair or discharge any obligations of the undersigned
pursuant to the Pledge Agreement and shall not constitute a waiver by Lender of
any of Lender's rights against the undersigned.
Dated: May ___, 1995.
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇ LITTLE 1988 TRUSTS
117
SECOND AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("this Amendment") is made and entered into this 3rd day of April,
1996, to be effective as of the respective date herein indicated, by and
between SEPCO INDUSTRIES, INC., a Texas corporation ("Borrower"), and FLEET
CAPITAL CORPORATION, a Connecticut corporation, formerly known as Shawmut
Capital Corporation, and successor-in-interest by assignment to Barclays
Business Credit, Inc. ("Lender").
RECITALS
A. Borrower and Lender have entered into that certain Second
Amended and Restated Loan and Security Agreement, dated as of April 1, 1994, as
amended by that certain First Amendment to Second Amended and Restated Loan and
Security Agreement and Secured Promissory Note, dated May, 1995, executed by
Borrower and Lender (as amended, the "Loan Agreement").
B. Borrower and Lender desire to further amend the Loan Agreement
and the Other Agreements as hereinafter 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, intending to be legally bound, agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the
Loan Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
Effective as of the respective date herein indicated, the Loan
Agreement is hereby amended as follows:
2.01 AMENDMENT TO DEFINITION OF "BANK" IN SECTION 1.1. Effective
as of December 8, 1995, the definition of "Bank" in Section 1.1 of the Loan
Agreement is hereby amended by deleting the reference to "Shawmut Bank
Connecticut, N.A." therefrom and substituting "Fleet National Bank of
Connecticut" in lieu thereof.
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 1
118
2.02 REFERENCES TO "SHAWMUT CAPITAL CORPORATION". The Loan
Agreement and the Other Agreements are hereby amended by deleting any and all
references to "Shawmut Capital Corporation" therefrom and substituting "Fleet
Capital Corporation" in lieu thereof.
2.03 AMENDMENT TO SECTION 9.2(G). Effective as of December 31,
1995, Section 9.2(G) of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
"(G) Declare or make any Distributions; provided, however, that
notwithstanding the foregoing, Borrower may pay cash dividends
on Borrower's preferred stock provided that (i) the aggregate
amount of such paid dividends does not exceed $117,000 in any
fiscal year of Borrower, and (ii) at the time of such payment,
no Default or Event of Default shall be in existence."
2.04 AMENDMENT TO EXHIBIT I. Effective as of December 31, 1995,
Exhibit I to the Loan Agreement, which is the Schedule of Existing Loans and
advances to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, is amended as follows:
(a) The reference in Exhibit I to the dollar amount "$137,635.00"
is hereby deleted and substituted therefor is the dollar
amount "$136,028.00".
(b) The reference in Exhibit I to the dollar amount "$53,927.00"
is hereby deleted and substituted therefor is the dollar
amount "$53,298.00".
(c) The reference in Exhibit I to the dollar amount "$35,734.00"
is hereby deleted and substituted therefor is the dollar
amount "$122,735.00".
(d) The reference in Exhibit I to the dollar amount "$665,235.00"
is hereby deleted and substituted therefor is the dollar
amount "$750,000.00".
ARTICLE III
LIMITED WAIVERS
3.01 LIMITED WAIVERS. Upon satisfaction of the conditions
precedent specified in Article IV hereof, Lender hereby waives any Default or
Event of Default which occurred solely from the following:
(a) Failure by Borrower to furnish to Lender not later than 90
days after the close of Borrower's 1995 fiscal year, the
audited financial statements described in Section 9.1(J) of
the Loan Agreement, which failure is a violation of Section
9.1(J) of the Loan Agreement; provided, however, this waiver
is conditioned on Borrower's supplying such audited financial
statements to Lender by April 30, 1996;
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
119
(b) The payment by Borrower to the ▇▇▇▇▇▇▇' children's trusts of
Distributions in the aggregate amount of $22,500 during
Borrower's 1995 fiscal year, which is a violation of Section
9.2(G) of the Loan Agreement;
(c) Making aggregate Capital Expenditures of $1,515,000 during
Borrower's 1995 fiscal year, which is a violation of Section
9.2(I) of the Loan Agreement; and
(d) (i) Creation by Borrower of a new wholly-owned Subsidiary,
Bayou Pumps, Inc., a Texas corporation ("Bayou Pumps-Texas"),
(ii) acquisition of the shares of Bayou Pumps, Inc., a
Louisiana corporation ("Bayou Pumps-Louisiana"), by Bayou
Pumps-Texas, pursuant to the provisions of that certain
Agreement and Plan of Reorganization, entered into effective
as of December 27, 1995, by and among ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, Bayou Pumps-Texas, Bayou Pumps-Louisiana, and
Borrower, and (iii) the merger of Bayou Pumps-Louisiana into
Bayou Pumps-Texas, which events constitute violations of
Sections 9.2(A) and 9.2(H) of the Loan Agreement.
Except as otherwise specifically provided for in this Amendment,
nothing contained herein shall be construed as a waiver by Lender of
any covenant or provision of the Loan Agreement, the Other Agreements,
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 Agreements,
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,
unless specifically waived in writing by Lender:
(a) Lender shall have received this Amendment, duly
executed by Borrower together with such additional documents, instruments and
information as Lender or its legal counsel may request;
(b) The representations and warranties contained herein
and in the Loan Agreement and the Other Agreements, as each is amended hereby,
shall be true and correct as of the date hereof, as if made on the date hereof;
(c) No Default or Event of Default shall have occurred
and be continuing, unless such Default or Event of Default has been
specifically waived by the provisions of Article III hereof or otherwise
specifically waived in writing by Lender; and
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 3
120
(d) 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.
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 the Other Agreements, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the Other Agreements are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the Loan
Agreement and the Other Agreements, 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 (a) the execution, delivery and performance of this
Amendment and any and all Other Agreements 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; (b) attached hereto as Annex A is a true, correct and
complete copy of presently effective resolutions of Borrower's Board of
Directors authorizing the execution, delivery and performance of this Amendment
and any and all Other Agreements executed and/or delivered in connection
herewith, certified by the Assistant Secretary of Borrower; (c) the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any Other Agreement are true and correct on and as of the date
hereof and on and as of the date of execution hereof as though made on and as
of each such date; (d) no Default or Event of Default under the Loan Agreement,
as amended hereby, has occurred and is continuing, unless such Default or Event
of Default has been specifically waived in writing by Lender; (e) Borrower is
in full compliance with all covenants and agreements contained in the Loan
Agreement and the Other Agreements, as amended hereby; and (f) Borrower has not
amended its Articles of Incorporation or its Bylaws since the 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
Agreement, including, without limitation, any document furnished in connection
with this Amendment, shall survive the execution and delivery of this Amendment
and the Other Agreements, 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 Agreement and
the Other Agreements, 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
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 4
121
Agreement, as amended hereby, are hereby amended so that any reference in the
Loan Agreement and such Other Agreements 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 costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the Other Agreements 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 Loan Agreement, as amended hereby, or any Other Agreements,
including, without, limitation, the 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.
6.05 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 that Borrower may not assign or transfer any of
its rights or obligations hereunder without the prior written consent of
Lender.
6.06 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.
6.07 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
by Borrower shall be deemed a consent to or waiver of any other breach of the
same or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER AGREEMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 5
122
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND LENDER.
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.
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 6
123
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BORROWER"
SEPCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. VP Finance
"LENDER"
FLEET CAPITAL CORPORATION, FORMERLY
KNOWN AS SHAWMUT CAPITAL CORPORATION,
SUCCESSOR-IN-INTEREST BY
ASSIGNMENT TO BARCLAYS
BUSINESS CREDIT, INC.
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
ANNEX:
A - Certified Resolutions of Borrower's Board of Directors
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 7
124
ANNEX A
CERTIFIED RESOLUTIONS OF BORROWER'S BOARD OF DIRECTORS
RESOLVED: That any officer of Sepco Industries, Inc., a Texas
corporation (the "Corporation"), acting alone, by his signature be, and the
same hereby is, authorized and directed, in the name of and on behalf of the
Corporation (a) to amend the Corporation's existing Second Amended and Restated
Loan and Security Agreement by and between the Corporation and Barclays
Business Credit, Inc., predecessor-in-interest to Fleet Capital Corporation,
formerly known as Shawmut Capital Corporation ("Lender"), (b) to execute and
deliver to Lender with such changes in the terms and provisions thereof as the
officer executing same shall, in his sole discretion, deem advisable, (i) a
certain proposed Second Amendment to Second Amended and Restated Loan and
Security Agreement, a draft of which has been reviewed and discussed by the
Board of Directors of the Corporation, and (ii) such other agreements,
instruments, statements and writings as the officer or officers executing the
same may deem desirable or necessary in connection therewith, and (c) to
perform such other acts as the officer or officers performing such acts on
behalf of the Corporation may deem desirable or necessary in connection
therewith; and be it
FURTHER RESOLVED: That said agreements will benefit the Corporation,
both directly and indirectly, and are in the best interests of the Corporation;
and be it
FURTHER RESOLVED: That said agreements and other statements in
writing executed in the name and on behalf of the Corporation by any officer of
the Corporation shall be presumed conclusively to be the instruments, the
execution of which is authorized by these resolutions; and be it
FURTHER RESOLVED: That the officers of the Corporation be, and the
same hereby are, authorized and directed to execute, in the name of and on
behalf of the Corporation, security agreements, financing statements,
assignments, collateral reports, loan statements, confirmations of delivery,
lien statements, pledge certificates, release certificates, removal reports,
guaranties, cross- collateralization agreements and such other writings and to
take such other actions as are necessary in their dealings with Lender, and any
such papers executed and any such actions taken by any of them prior to this
time are approved, ratified and confirmed; and be it
FURTHER RESOLVED: That the Secretary or any Assistant Secretary of
the Corporation, by the signature of any one or more of them, be, and the same
hereby are, authorized and directed to attest the execution by the Corporation
of the papers signed pursuant to these resolutions, to affix the seal of the
Corporation thereto, if required by Lender, and to certify to Lender the
adoption of these resolutions.
ANNEX A TO SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 1
125
CERTIFICATION
The undersigned hereby certifies that the within and foregoing
resolutions are in effect as of the date hereof, without modification, and that
the person signing the within and foregoing Amendment on behalf of the
Corporation is the duly elected officer stated below his name, that he is
authorized to sign such Amendment, and that his signature thereon is genuine.
DATED: April 4, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A TO SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
126
CONSENT AND RATIFICATION
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, has executed that certain Amended
and Restated Unconditional Guaranty dated September 16, 1994 (the "Guaranty"),
in favor of BARCLAYS BUSINESS CREDIT, INC., predecessor-in-interest to FLEET
CAPITAL CORPORATION, formerly known as Shawmut Capital Corporation ("Lender").
The undersigned hereby (i) consents and agrees to the terms of the Second
Amendment to Second Amended and Restated Loan and Security Agreement, dated as
of April 3, 1996 (the "Loan Amendment"), between Sepco Industries, Inc. and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that the Guaranty shall remain in full force and effect and shall continue to
be the legal, valid and binding obligation of the undersigned enforceable
against it in accordance with its terms. Furthermore, the undersigned hereby
agrees and acknowledges that (a) the obligations, indebtedness and liabilities
arising in connection with the Loan Amendment comprise some, but not all, of
the "Obligations" as such term is used in the Guaranty, (b) the Guaranty is an
"Other Agreement" as such term is defined in the Loan Agreement, (c) the
Guaranty is not as of this date subject to any claims, defenses or offsets,
(d) nothing contained in the Loan Agreement or any Other Agreement entered into
prior to or as of the date hereof shall adversely affect any right or remedy of
Lender under the Guaranty, and (e) the execution and delivery of the Loan
Amendment shall in no way reduce, impair or discharge any obligations of the
undersigned as guarantor pursuant to the Guaranty and shall not constitute a
waiver by Lender of any of Lender's rights against the undersigned.
Dated: April __, 1996.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually
CONSENT AND RATIFICATION TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 1
127
CONSENT AND RATIFICATION
The undersigned, ▇. ▇. ▇▇▇▇▇▇ BEARING CO., has executed that certain
Amended and Restated Unconditional Guaranty dated September 16, 1994 (the
"Guaranty"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to FLEET CAPITAL CORPORATION, formerly known as Shawmut
Capital Corporation ("Lender"). The undersigned hereby (i) consents and agrees
to the terms of the Second Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of April 3, 1996 (the "Loan Amendment"), between
Sepco Industries, Inc. and Lender, a copy of which has been reviewed by the
undersigned, and (ii) agrees that the Guaranty shall remain in full force and
effect and shall continue to be the legal, valid and binding obligation of the
undersigned enforceable against it in accordance with its terms. Furthermore,
the undersigned hereby agrees and acknowledges that (a) the obligations,
indebtedness and liabilities arising in connection with the Loan Amendment
comprise some, but not all, of the "Obligations" as such term is used in the
Guaranty, (b) the Guaranty is an "Other Agreement" as such term is defined in
the Loan Agreement, (c) the Guaranty, is not as of the date hereof subject to
any claims, defenses or offsets, (d) nothing contained in the Loan Agreement or
any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: April ___, 1996.
▇. ▇. ▇▇▇▇▇▇ BEARING CO.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior VP Finance
CONSENT AND RATIFICATION TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 2
128
CONSENT AND RATIFICATION
The undersigned, SOUTHERN ENGINE & PUMP COMPANY, has executed that
certain Amended and Restated Unconditional Guaranty dated September 16, 1994
(the "Guaranty"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to FLEET CAPITAL CORPORATION, formerly known as Shawmut
Capital Corporation ("Lender"). The undersigned hereby (i) consents and agrees
to the terms of the Second Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of April 3, 1996 (the "Loan Amendment"), between
Sepco Industries, Inc. and Lender, a copy of which has been reviewed by the
undersigned, and (ii) agrees that the Guaranty shall remain in full force and
effect and shall continue to be the legal, valid and binding obligation of the
undersigned enforceable against it in accordance with its terms. Furthermore,
the undersigned hereby agrees and acknowledges that (a) the obligations,
indebtedness and liabilities arising in connection with the Loan Amendment
comprise some, but not all, of the "Obligations" as such term is used in the
Guaranty, (b) the Guaranty is an "Other Agreement" as such term is defined in
the Loan Agreement, (c) the Guaranty, is not as of the date hereof subject to
any claims, defenses or offsets, (d) nothing contained in the Loan Agreement or
any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: April 4, 1996.
SOUTHERN ENGINE & PUMP COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior VP Finance
CONSENT AND RATIFICATION TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 3
129
CONSENT AND RATIFICATION
The undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇ LITTLE 1988 TRUSTS, has executed that
certain Amended and Restated Pledge Agreement dated September 16, 1994 (the
"Pledge Agreement"), in favor of BARCLAYS BUSINESS CREDIT, INC.,
predecessor-in-interest to FLEET CAPITAL CORPORATION, formerly known as Shawmut
Capital Corporation ("Lender"). The undersigned hereby (i) consents and agrees
to the terms of the Second Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of April 3, 1996 (the "Loan Amendment"), executed
by Sepco Industries, Inc. and Lender, a copy of which has been reviewed by the
undersigned, and (ii) agrees that the Pledge Agreement shall remain in full
force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a)
the obligations, indebtedness and liabilities arising in connection with the
Loan Amendment comprise some, but not all, of the "Secured Indebtedness" as
such term is used in the Pledge Agreement, (b) the Pledge Agreement is an
"Other Agreement" as such term is defined in the Loan Agreement, (c) the Pledge
Agreement, is not as of the date hereof subject to any claims, defenses or
offsets, (d) nothing contained in this Agreement or any Other Agreement entered
into prior to or as of the date hereof shall adversely affect any right or
remedy of Lender under the Pledge Agreement, and (e) the execution and delivery
of the Loan Amendment shall in no way reduce, impair or discharge any
obligations of the undersigned pursuant to the Pledge Agreement and shall not
constitute a waiver by Lender of any of Lender's rights against the
undersigned.
Dated: April 4, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
AND ▇▇▇▇▇▇ ▇▇▇ LITTLE 1988 TRUSTS
CONSENT AND RATIFICATION TO SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 4
130
THIRD AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("this Amendment") is made and entered into this 9th day of
September, 1996, to be effective as of the respective date herein indicated, by
and among SEPCO INDUSTRIES, INC., a Texas corporation ("Sepco") and BAYOU
PUMPS, INC., a Texas corporation ("Bayou") (Sepco and Bayou being hereinafter
individually and collectively referred to as "Borrower", as governed by the
provisions of Section 1.4 and Section 1.5 of the Loan Agreement, as hereinafter
defined), and FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"),
successor-in-interest by merger to Fleet Capital Corporation, a Connecticut
corporation (Fleet Capital Corporation, a Connecticut corporation, having been,
formerly known as Shawmut Capital Corporation, and having been the
successor-in-interest by assignment to Barclays Business Credit, Inc., a
Connecticut corporation).
RECITALS
A. Sepco and Barclays Business Credit, Inc., have entered into
that certain Second Amended and Restated Loan and Security Agreement, dated as
of April 1, 1994, as amended by that certain First Amendment to Second Amended
and Restated Loan and Security Agreement and Secured Promissory Note, dated
May, 1995, executed by Sepco and Fleet Capital Corporation, a Connecticut
corporation (at that time known as Shawmut Capital Corporation), and as amended
by that certain Second Amendment to Second Amended and Restated Loan and
Security Agreement, entered into on April 3, 1996, executed by Sepco and Fleet
Capital Corporation, a Connecticut corporation (as amended, the "Loan
Agreement").
B. Lender, effective May 1, 1996, as successor-in-interest by
merger to Fleet Capital Corporation, a Connecticut corporation, succeeded to,
and today remains the present holder of, all right, title and interest of Fleet
Capital Corporation, a Connecticut corporation, in the Loan Agreement and each
of the Other Agreements.
C. Borrower and Lender desire to further amend the Loan Agreement
and the Other Agreements as hereinafter set forth, including, without
limitation, to amend the Loan Agreement to make Bayou a party to the Loan
Agreement and to make Bayou a joint and several co-obligor for certain
obligations and indebtedness incurred under the Loan Agreement, all as
hereinafter 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, intending to be legally bound, agree as
follows:
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - PAGE 1
131
AGREEMENT
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the
Loan Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
Effective as of the respective date herein indicated, the Loan
Agreement is hereby amended as follows:
2.01 AMENDMENT TO DEFINITION OF "BANK" IN SECTION 1.1. Effective
as of May 1, 1996, the definition of "Bank" in Section 1.1 of the Loan
Agreement is hereby amended by deleting the reference to "Fleet National Bank
of Connecticut" therefrom and substituting "Fleet National Bank" in lieu
thereof.
2.02 REFERENCES TO "FLEET CAPITAL CORPORATION". Effective as of
May 1, 1996, the Loan Agreement and the Other Agreements are hereby amended
such that any and all references to "Fleet Capital Corporation" shall be deemed
to be a reference to Fleet Capital Corporation, a Rhode Island corporation.
2.03 AMENDMENT TO DEFINITION OF "EURODOLLAR LOAN" IN SECTION 1.1.
Effective as of the date of execution of this Amendment, the definition of
"Eurodollar Loan" in Section 1.1 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"Eurodollar Loan - a Revolving Credit Loan or any portion of
the Term Loan which bears interest at a Eurodollar Base Rate."
2.04 AMENDMENT TO DEFINITION OF "TERM LOAN" IN SECTION 1.1.
Effective as of the date of execution of this Amendment, the definition of
"Term Loan" in Section 1.1 of the Loan Agreement is hereby amended and restated
to read in its entirety as follows:
"Term Loan - as defined in Section 2.2 of this Agreement."
2.05 AMENDMENT TO DEFINITION OF "TERM NOTE" IN SECTION 1.1.
Effective as of the date of execution of this Amendment, the definition of
"Term Note" in Section 1.1 of the Loan Agreement is hereby amended and restated
to read in its entirety as follows:
"Term Note - that certain Secured Promissory Note, dated March
1, 1994, in the original principal amount of $1,329,277.37,
executed by Sepco, and payable to the order of Lender, as
renewed, extended, modified and restated from time to
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
132
time, including, without limitation, as modified and extended
by the third Amendment Modification Agreements (which Third
Amendment Modification Agreements, among other things,
modified the Term Note to reflect the increase of the Term
Loan to $5,000,000)."
2.06 AMENDMENT TO SECTION 1.1; ADDITION OF CERTAIN DEFINITIONS.
Section 1.1 of the Loan Agreement is hereby amended by adding the following new
definitions thereto, to be inserted in their proper alphabetical order:
"Base Rate Loans - all Loans other than Eurodollar Loans.
Bayou - Bayou Pumps, Inc., a Texas corporation.
Bayou Guaranty Agreement - that certain Continuing Guaranty
Agreement, executed by Bayou, in connection with the Third
Amendment, whereby Bayou unconditionally guarantees payment of
all Obligations of Sepco to Lender, such Continuing Guaranty
Agreement to be in form and substance satisfactory to Lender,
in its sole discretion.
Sepco - Sepco Industries, Inc., a Texas corporation.
Third Amendment - the Third Amendment to Second Amended and
Restated Loan and Security Agreement, dated as of September 9,
1996, by and among Sepco, Bayou and Lender.
Third Amendment Deed of Trust - that certain Deed of Trust,
Security Agreement, Financing Statement and Assignment of
Rents, executed by Sepco, for the benefit of Lender (executed
in connection with the Third Amendment), covering the real
property in ▇▇▇▇▇▇ County, Texas, legally described on Exhibit
G attached to the Third Amendment, whereby Lender is granted a
first priority Lien in such real property securing the
Obligations, such Deed of Trust, Security Agreement, Financing
Statement, and Assignment of Rents to be in form and substance
satisfactory to Lender, in Lender's sole discretion.
Third Amendment Modification Agreements - each of the following
documents, each dated on or about the date hereof, and each executed by Sepco
and Lender:
(A) Modificaton of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [▇▇▇▇▇▇ County,
Texas];
(B) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [▇▇▇▇▇ County,
Texas];
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 3
133
(C) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Ector County,
Texas];
(D) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Matagorda County,
Texas];
(E) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Jefferson County,
Texas];
(F) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Lea County, New
Mexico];
(G) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Dallas County,
Texas];
(H) Modification of Secured Promissory Note and
Second Modification to Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents [Nueces County,
Texas];
(I) Modification of Secured Promissory Note and
Second Modification to Mortgage, Security Agreement, Financing
Statement and Assignment of Rents [Lafayette Parish,
Louisiana]; and
(J) Modification of Secured Promissory Note and
Second Modification to Mortgage, Security Agreement, Financing
Statement and Assignment of Rents [▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Louisiana]."
2.07 REFERENCES TO "GUARANTORS". Effective as of the date of
execution of this Amendment, all references in the Loan Agreement to
"Guarantors" shall be deemed to also refer to Bayou.
2.08 REFERENCES TO "GUARANTY AGREEMENTS". Effective as of the date
of execution of this Amendment, all references in the Loan Agreement to
"Guaranty Agreements" shall be deemed to also refer to Bayou Guaranty
Agreement.
2.09 REFERENCES TO "MORTGAGES". Effective as of the date of
execution of this Amendment, all references in the Loan Agreement to
"Mortgages" shall be deemed to also refer to the Third Amendment Deed of Trust.
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 4
134
2.10 REFERENCES TO "BORROWER". Effective as of the date of
execution of this Amendment, all references in the Loan Agreement to "Borrower"
shall be deemed to include references to Bayou, subject to the provisions of
Section 1.4 and Section 1.5 of the Loan Agreement.
2.11 ADDITION OF SECTION 1.4; THE TERM "BORROWER" OR "BORROWERS".
Effective as of the date of execution of this Amendment, a new Section 1.4 is
added to the Loan Agreement, to read in its entirety as follows:
"1.4 The Term 'Borrower' or 'Borrowers'. All references
to 'Borrower' or 'Borrowers' herein shall refer to and include each
Borrower separately and all representations contained herein shall be
deemed to be separately made by each of them, and each of the
covenants, agreements and obligations set forth herein shall be deemed
to be the joint and several covenants, agreements and obligations of
them. Any notice, request, consent, report or other information or
agreement delivered to Lender by any Borrower shall be deemed to be
ratified by, consented to and also delivered by the other Borrower.
Each Borrower recognizes and agrees that each covenant and agreement
of 'Borrower' or 'Borrowers' under this Agreement and the Other
Agreements shall create a joint and several obligation of the
Borrowers, which may be enforced against Borrowers, jointly, or
against each Borrower separately. Without limiting the terms of this
Agreement and the Other Agreements, security interests granted under
this Agreement and Other Agreements in properties, interests, assets
and collateral shall extend to the properties, interests, assets and
collateral of each Borrower. Similarly, the term 'Obligations' shall
include, without limitation, all obligations, liabilities and
indebtedness of such corporations, or any one of them, to Lender,
whether such obligations, liabilities and indebtedness shall be joint,
several, joint and several or individual."
2.12 ADDITION OF SECTION 1.5; "SEPCO OBLIGATIONS". Effective as of
the date of execution of this Amendment, a new Section 1.5 is added to the Loan
Agreement, to read in its entirety as follows:
"1.5 Sepco Obligations. Notwithstanding any other
provision of the Term Note or this Agreement to the contrary, it is
hereby agreed that Bayou is not assuming payment of either (x) the
indebtedness evidenced by the Term Note (whether such indebtedness was
incurred on the date of execution of the Third Amendment or earlier)
or (y) of the unpaid principal balance of the other Obligations which
was incurred by Sepco prior to the date of execution of the Third
Amendment pursuant to this Agreement and the Other Agreements
(collectively, the 'Sepco Obligations'). However, the parties hereto
agree and acknowledge that the preceding sentence shall not (i) limit
any contingent liability of Bayou for payment of any of the Sepco
Obligations which arises pursuant to the Bayou Guaranty Agreement, or
(ii) limit the security interest and Liens in favor of Lender granted
by Bayou against the assets of Bayou as a result of Bayou becoming an
additional named 'Borrower', which Liens shall secure payment of all
Obligations arising in connection with this Agreement, whether
currently existing or hereafter arising. For purposes of determining
on or after the date hereof which Obligations outstanding
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 5
135
constitute Sepco Obligations and how payments are applied to Sepco
Obligations, (x) all payments received by Lender from Sepco on account
of the Obligations shall be deemed to be applied first in payment of
all then due and payable Sepco Obligations (until such time as the
Sepco Obligations shall have been reduced to zero), and thereafter to
the other Obligations as hereinafter set forth and unless Borrower
specifically indicates to the contrary in writing to Lender, all
payments received by Lender through the Dominion Account shall be
deemed to be payments received by Lender from Sepco, (y) all payments
received by Lender from Bayou shall be deemed to be applied on account
of Obligations which are not Sepco Obligations, and to the extent
that, notwithstanding the foregoing, for any reason anshall instead be
determined to have been applied on account of any Sepco Obligations,
such payment shall be deemed to have been made by Bayou pursuant to
the Bayou Guaranty Agreement, and (z) unless Borrower specifically
indicates to the contrary in writing to Lender, all payments received
by Lender on the Term Note shall be deemed to be payments received
from Sepco, and to the extent that, notwithstanding the foregoing, for
any reason any payment received by Lender on the Term Note shall
instead be determined to have been made by Bayou, such payment shall
be deemed to have been made by Bayou pursuant to the Bayou Guaranty
Agreement."
2.13 AMENDMENT TO SECTION 2.2. Effective as of the date of
execution of this Amendment, Section 2.2 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
"2.2 Term Loan. The parties hereto agree that
effective as of April 1, 1994, Lender made to Sepco that
certain term loan in the original principal amount of
$1,329,277.37, which term loan is currently evidenced by that
certain Secured Promissory Note, dated March 1, 1994, in the
original principal amount of $1,329,277.37, executed by Sepco,
and payable to the order of Lender. Sepco further agrees,
represents and warrants that as of the date of execution of
the Third Amendment, the unpaid principal amount of such term
loan is $82,231.76, and that there are no claims or offsets
against, or defenses or counterclaims to, payment of such
amount to Lender. Sepco further agrees, represents and
warrants that it has requested that Lender convert
$4,917,768.24 of the principal amount of Revolving Credit
Loans made to Sepco by Lender which are outstanding on the
date of execution of the Third Amendment to a term loan, which
term loan will be combined and consolidated with the
outstanding principal amount of the term loan made to Sepco on
April 1, 1994, such that the combined term loan shall be in
the aggregate principal amount of $5,000,000 (such $5,000,000
term loan made on the date of execution of the Third Amendment
being referred to in this Agreement as the 'Term Loan').
Subject to the terms and conditions of this Agreement, Lender
agrees to make the Term Loan to Borrower. The Term Loan shall
be repayable in accordance with the terms of the Term Note,
and shall be secured by the Collateral. The parties hereto
agree that the Term Loan represents a portion of the 'Sepco
Obligations' referred to and defined in Section 1.5 of this
Agreement. If Sepco sells any of its Equipment or real
Property, or if any of the other Property
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 6
136
owned by Sepco is taken by condemnation, Sepco shall pay to
Lender, unless otherwise agreed by Lender, as and when
received by Sepco and as a mandatory prepayment of the Term
Loan (or, at Lender's option, such of the other Obligations as
Lender may elect), a sum equal to the proceeds received by
Sepco from such sale or condemnation, less any state or
federal income tax directly attributable thereto."
2.14 ADDITION OF SECTION 2.5; JOINT AND SEVERAL LIABILITY; RIGHTS
OF CONTRIBUTION. Effective as of the date of execution of this Amendment, a
new Section 2.5 is added to the Loan Agreement to read in its entirety as
follows:
"2.5 Joint and Several Liability; Rights of Contribution.
(A) Each Borrower states and acknowledges that: (i)
pursuant to this Agreement, Borrowers desire to utilize their
borrowing potential on a consolidated basis to the same extent
possible if they were merged into a single corporate entity; (ii) it
has determined that it will benefit specifically and materially from
the advances of credit contemplated by this Agreement; (iii) it is
both a condition precedent to the obligations of Lender hereunder and
a desire of the Borrowers that each Borrower execute and deliver to
Lender this Agreement; and (iv) Borrowers have requested and bargained
for the structure and terms of and security for the advances
contemplated by this Agreement.
(B) Each Borrower hereby irrevocably and unconditionally:
(i) agrees that it is jointly and severally liable to Lender for the
full and prompt payment of the Obligations and the performance by each
Borrower of its obligations hereunder in accordance with the terms
hereof; (ii) agrees to fully and promptly perform all of its
obligations hereunder with respect to each advance of credit hereunder
as if such advance had been made directly to it; and (iii) agrees as a
primary obligation to indemnify Lender on demand for and against any
loss incurred by Lender as a result of any of the obligations of any
Borrower being or becoming void, voidable, unenforceable or
ineffective for any reason whatsoever, whether or not known to Lender
or any Person, the amount of such loss being the amount which Lender
would otherwise have been entitled to recover from Borrower.
(C) It is the intent of each Borrower that the
indebtedness, obligations and liability hereunder of no one of them be
subject to challenge on any basis. Accordingly, as of the date
hereof, the liability of each Borrower under this Section 2.5,
together with all of its other liabilities to all Persons as of the
date hereof and as of any other date on which a transfer is deemed to
occur by virtue of this Agreement, calculated in amount sufficient to
pay its probable net liabilities on its existing Indebtedness as the
same become absolute and matured ('Dated Liabilities') is, and is to
be, less than the amount of the aggregate of a fair valuation of its
Property as of such corresponding date ('Dated Assets'). To this end,
each Borrower under this Section 2.5, (i) grants to and recognizes in
each other Borrower, ratably, rights of subrogation and contribution
in the amount, if any, by which the Dated Assets of such Borrower, but
for the aggregate of subrogation
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 7
137
and contribution in its favor recognized herein, would exceed the
Dated Liabilities of such Borrower or, as the case may be, (ii)
acknowledges receipt of and recognizes its right to subrogation and
contribution ratably from the other Borrower in the amount, if any, by
which the Dated Liabilities of such Borrower, but for the aggregate of
subrogation and contribution in its favor recognized herein, would
exceed the Dated Assets of such Borrower under this Section 2.5. In
recognizing the value of the Dated Assets and the Dated Liabilities,
it is understood that Borrowers will recognize, to at least the same
extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material
objective of this Section 2.5 that each Borrower recognizes rights to
subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of
its joint and several obligations hereunder."
2.15 AMENDMENT TO SECTION 3.1(A). Effective as of the date of
execution of this Amendment, the first three sentences of Section 3.1(A) of the
Loan Agreement are amended and restated to read in their entirety as follows:
"(A) Outstanding principal on the Loans shall bear interest,
calculated daily (computed on the actual number of days elapsed over a
year of 360 days) at the following rates per annum (individually
called, as applicable, an 'Applicable Annual Rate'): (i) Eurodollar
Loans shall bear interest at a rate per annum equal to 2.75% above the
Eurodollar Base Rate for the Eurodollar Interest Period applicable
thereto and (ii) all other Loans shall bear interest at a rate per
annum equal to .50% above the Base Rate. All Loans shall bear
interest at a rate per annum equal to .50% above the Base Rate, unless
the Borrower provides a Eurodollar Borrowing Notice to the Lender in
accordance with Section 3.7(A) irrevocably electing that all or a
portion of the Loans are to bear interest at a Eurodollar Base Rate.
Each Loan that is not a Eurodollar Loan shall be increased or
decreased, as the case may be, by an amount equal to any increase or
decrease in the Base Rate, with such adjustments to be effective as of
the opening of business on the day that any such change in the Base
Rate becomes effective."
2.16 AMENDMENT TO SECTION 3.3(A). Effective as of the date of
execution of this Amendment, Section 3.3(A) of the Loan Agreement is amended by
deleting therefrom the reference to the date "January 2, 1997" and substituting
therefor the date "January 2, 1999".
2.17 AMENDMENT TO SECTION 3.3(C). Effective as of the date of
execution of this Amendment, Section 3.3(C) of the Loan Agreement is amended by
deleting therefrom the reference to the date "January 2, 1997" and substituting
therefor the date "January 2, 1999".
2.18 AMENDMENT TO SECTION 3.7(A). Effective as of the date of
execution of this Amendment, Section 3.7(A) of the Loan Agreement is amended
and restated to read in its entirety as follows:
"(A) Manner of Borrowing a Eurodollar Loan. Borrower shall give
Lender notice of its intention to either (i) borrow a Eurodollar Loan
or (ii) designate a portion of the Base
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
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138
Rate Loans to bear interest based upon the Eurodollar Base Rate, in
the form of Annex B to the Third Amendment (a 'Eurodollar Borrowing
Notice'), in which notice Borrower shall specify (x) the aggregate
amount of such Eurodollar Loan, (y) the requested date of such
Eurodollar Loan, and (z) the Eurodollar Interest Period applicable
thereto. Borrower shall give Lender the Eurodollar Borrowing Notice
at least two (2) Business Days prior to the requested date of the
Eurodollar Loan. With respect to such Eurodollar Loans, (I) each
Eurodollar Loan shall be in an integral multiple of $1,000,000, (II)
no more than four (4) Eurodollar Interest Periods may be in existence
at any one time, and (III) Borrower may not request a Eurodollar Loan
if there exists a Default or Event of Default. The Borrower shall
select Eurodollar Interest Periods with respect to Eurodollar Loans so
that no Eurodollar Interest Period expires after the end of the
Original Term, or if extended pursuant to Section 3.3(A), any Renewal
Term. An outstanding Loan may be converted to a Eurodollar Loan at
any time subject to the provisions of this Section 3.7."
2.19 AMENDMENT TO SECTION 3.7(B). Effective as of the date of
execution of this Amendment, the second sentence of Section 3.7(B) of the Loan
Agreement is amended and restated to read in its entirety as follows:
"If at the end of a Eurodollar Interest Period for an
outstanding Eurodollar Loan, Borrower has failed to deliver to
Lender a new Eurodollar Borrowing Notice with respect to such
Eurodollar Loan or to pay such Eurodollar Loan, then such
Eurodollar Loan shall be converted to a Base Rate Loan bearing
interest at a rate, and subject to all other terms and
conditions of this Agreement, applicable to Base Rate Credit
Loans on and after the last day of such Eurodollar Interest
Period until paid or until the effective date of a new
Eurodollar Borrowing Notice with respect thereto."
2.20 GRANT BY BAYOU OF SECURITY INTEREST IN COLLATERAL. Bayou
hereby agrees that by becoming a party to the Loan Agreement, it is subject to
all the provisions of the Loan Agreement, including, without limitation, the
grant of a continuing security interest in and Lien upon all of the Property
and interests in Property of Bayou, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located, as specified in Section
4.1 of the Loan Agreement. In accordance therewith, in order to secure the
prompt payment and performance to Lender of the Obligations, Bayou hereby
grants to Lender a continuing security interest in and Lien upon all of the
Property and interests in Property of Bayou, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located including,
without limitation, the following:
(A) Accounts;
(B) Inventory;
(C) Equipment;
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(D) General Intangibles;
(E) all monies and other Property of any kind, now or at
any time or times hereafter, in the possession or under the control of Lender
or a bailee of Lender;
(F) all accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (A), (B), (C), (D) and
(E) above, including, without limitation, Proceeds of and unearned premiums
with respect to insurance Policies insuring any of the Collateral; and
(G) all books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Bayou pertaining to any of (A), (B), (C), (D), (E) or
(F) above.
2.21 DELETION OF SECTION 10.2(C). Effective as of April 30,
1996, Section 10.2(C) of the Loan Agreement is deleted in its entirety.
2.22. DELETION OF SECTION 11.1(H). Effective as of April 30, 1996,
Section 11.1(H) of the Loan Agreement is deleted in its entirety.
2.23. DELIVERY TO LENDER OF MORTGAGEE CONSENT AND FIRST LIENHOLDER
ESTOPPEL LETTER REGARDING PROPERTY DESCRIBED IN THIRD AMENDMENT DEED OF TRUST.
In addition to and not in limitation of its other agreements under the Loan
Agreement, Borrower agrees to deliver to Lender within ninety (90) days after
the date of execution of this Amendment, each of the following, each in form
and substance satisfactory to Lender, in its sole discretion:
(a) Mortgagee Consent regarding the property described in
the Third Amendment Deed of Trust, duly executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"); and
(b) First Lienholder Estoppel Letter regarding the
property described in the Third Amendment Deed of Trust, duly executed
by the ▇▇▇▇▇▇▇.
Borrower agrees that failure by Borrower to deliver either or both of the
above-described documents by the above date shall constitute an Event of
Default under the Loan Agreement.
ARTICLE III
CONDITIONS PRECEDENT
3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent,
unless specifically waived in writing by Lender:
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 10
140
(a) Lender shall have received each of the following,
each in form and substance satisfactory to Lender, in its sole discretion, and
each duly executed by each party thereof, other than Lender:
(i) This Amendment, duly executed by Lender,
together with the relevant Consent, Ratification, and Amendment,
respectively duly executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually, ▇.▇.
▇▇▇▇▇▇ Bearing Co., Southern Engine & Pump Company, and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustee for ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇ Little 1988 Trusts;
(ii) Bayou Guaranty Agreement, duly executed by
Bayou;
(iii) The Third Amendment Modification Agreements,
duly executed by Sepco;
(iv) The Third Amendment Deed of Trust, duly
executed by Sepco, accompanied by a commitment for issuance of
mortgagee title insurance policy, issued by a title company reasonably
satisfactory to Lender, whereby such title company agrees to issue to
Lender a mortgagee title insurance policy regarding such real
property, such mortgagee title insurance commitment to be in form and
substance satisfactory to Lender, in its sole discretion; and
(v) All other documents Lender may request with
respect to any matter relevant to this Amendment or the transactions
contemplated hereby;
(b) Lender shall have received in immediately available
funds from Sepco payment of the $25,000 restructuring fee described in Section
5.03 of this Amendment.
(c) The representations and warranties contained herein
and in the Loan Agreement and the Other Agreements, as each is amended hereby,
shall be true and correct as of the date hereof, as if made on the date hereof;
(d) No Default or Event of Default shall have occurred
and be continuing, unless such Default or Event of Default has been otherwise
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.
ARTICLE IV
NO WAIVER
4.01 NO WAIVER. Except as otherwise specifically provided for in
this Amendment, nothing contained herein shall be construed as a waiver by
Lender of any covenant or provision
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 11
141
of the Loan Agreement, the Other Agreements, this Amendment, or of any other
contract or instrument between any Borrower and Lender, and the failure of
Lender at any time or times hereafter to require strict performance by any
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 Agreements,
this Amendment and any other contract or instrument between any Borrower and
Lender.
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 the Other Agreements, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the Other Agreements are ratified and confirmed and shall
continue in full force and effect. Each Borrower and Lender agree that the
Loan Agreement and the Other Agreements, as amended hereby, shall continue to
be legal, valid, binding and enforceable in accordance with their respective
terms.
5.02 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants to Lender that (a) the execution, delivery and
performance of this Amendment and any and all Other Agreements executed and/or
delivered in connection herewith have been authorized by all requisite
corporate action on the part of such Borrower and will not violate the Articles
of Incorporation or Bylaws of such Borrower; (b) attached hereto as Annex A is
a true, correct and complete copy of presently effective resolutions of each
Borrower's Board of Directors authorizing the execution, delivery and
performance of this Amendment and any and all Other Agreements executed and/or
delivered in connection herewith, certified by the Assistant Secretary of
Borrower; (c) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any Other Agreement are true and correct on
and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (d) no Default or Event of Default
under the Loan Agreement, as amended hereby, has occurred and is continuing,
unless such Default or Event of Default has been specifically waived in writing
by Lender; (e) each Borrower is in full compliance with all covenants and
agreements contained in the Loan Agreement and the Other Agreements, as amended
hereby; (f) Sepco has not amended its Articles of Incorporation or its Bylaws
since the date of the Loan Agreement, and (g) Bayou has not amended its
Articles of Incorporation or its Bylaws since the date of incorporation of
Bayou.
5.03 RESTRUCTURING FEE. In consideration for the agreements of
Lender contained herein including, without limitation, extending the Original
Term and restructuring and increasing the Term Loan, but subject to the
provisions of Section 3.1(C) of the Loan Agreement, Sepco agrees to pay Lender
a fee of $25,000. Such fee shall be fully earned, and due and payable, on the
date of execution of this Amendment.
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 12
142
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in the Loan Agreement or any Other
Agreement, including, without limitation, any document furnished in connection
with this Amendment, shall survive the execution and delivery of this Amendment
and the Other Agreements, 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 Agreement and
the Other Agreements, 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 the Loan Agreement and such Other
Agreements 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, each
Borrower agrees to pay on demand all costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the Other Agreements 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 Loan Agreement, as amended hereby, or any Other Agreements,
including, without, limitation, the 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.
6.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of Lender and each Borrower and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations hereunder without the prior written consent of
Lender.
6.06 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.
6.07 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
by any Borrower shall be deemed a consent to or waiver of any other breach of
the same or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 13
143
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER AGREEMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, 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. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY EACH BORROWER AND LENDER.
6.11 RELEASE. EACH 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. EACH 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 ANY 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.
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 14
144
"BORROWER"
SEPCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: CEO
---------------------------------
BAYOU PUMPS, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"LENDER"
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
ANNEXES:
A-1 - Certified Resolutions of Sepco Industries, Inc.
A-2 - Certified Resolutions of Bayou Pumps, Inc.
B - Form of Eurodollar Borrowing Notice
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 15
145
ANNEX A-1
CERTIFIED RESOLUTIONS OF
SEPCO INDUSTRIES, INC.'S BOARD OF DIRECTORS
RESOLVED: That any officer of Sepco Industries, Inc., a Texas
corporation (the "Corporation"), acting alone, by his signature be, and the
same hereby is, authorized and directed, in the name of and on behalf of the
Corporation (a) to amend the Corporation's existing Second Amended and Restated
Loan and Security Agreement by and between the Corporation and Fleet Capital
Corporation, a Rhode Island corporation ("Lender"), successor-in-interest by
merger to Fleet Capital Corporation, a Connecticut corporation (Fleet Capital
Corporation, a Connecticut Corporation having been formerly known as Shawmut
Capital Corporation and having been the successor-in-interest by assignment to
Barclays Business Credit, Inc.), (b) to execute and deliver to Lender with such
changes in the terms and provisions thereof as the officer executing same
shall, in his sole discretion, deem advisable, (i) a certain proposed Third
Amendment to Second Amended and Restated Loan and Security Agreement to be
executed by Corporation, Bayou Pumps, Inc. and Lender, a draft of which has
been reviewed and discussed by the Board of Directors of the Corporation, and
(ii) such other agreements, instruments, statements and writings as the officer
or officers executing the same may deem desirable or necessary in connection
therewith, and (c) to perform such other acts as the officer or officers
performing such acts on behalf of the Corporation may deem desirable or
necessary in connection therewith; and be it
FURTHER RESOLVED: That said agreements will benefit the Corporation,
both directly and indirectly, and are in the best interests of the Corporation;
and be it
FURTHER RESOLVED: That said agreements and other statements in
writing executed in the name and on behalf of the Corporation by any officer of
the Corporation shall be presumed conclusively to be the instruments, the
execution of which is authorized by these resolutions; and be it
FURTHER RESOLVED: That the officers of the Corporation be, and the
same hereby are, authorized and directed to execute, in the name of and on
behalf of the Corporation, security agreements, financing statements,
assignments, collateral reports, loan statements, confirmations of delivery,
lien statements, pledge certificates, release certificates, removal reports,
guaranties, cross-collateralization agreements and such other writings and to
take such other actions as are necessary in their dealings with Lender, and any
such papers executed and any such actions taken by any of them prior to this
time are approved, ratified and confirmed; and be it
FURTHER RESOLVED: That the Secretary or any Assistant Secretary of
the Corporation, by the signature of any one or more of them, be, and the same
hereby are, authorized and directed to attest the execution by the Corporation
of the papers signed pursuant to these resolutions, to affix the seal of the
Corporation thereto, if required by Lender, and to certify to Lender the
adoption of these resolutions.
ANNEX A-1 TO THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 1
146
CERTIFICATION
The undersigned hereby certifies that the within and foregoing
resolutions are in effect as of the date hereof, without modification, and that
the person signing the within and foregoing Amendment on behalf of the
Corporation is the duly elected officer stated below his name, that he is
authorized to sign such Amendment, and that his signature thereon is genuine.
DATED: September 9, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A-1 TO THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
147
ANNEX A-2
CERTIFIED RESOLUTIONS OF
BAYOU PUMPS, INC.'S BOARD OF DIRECTORS
RESOLVED: That any officer of Bayou Pumps, Inc., a Texas corporation
(the "Corporation"), acting alone, by his signature be, and the same hereby is,
authorized and directed, in the name of and on behalf of the Corporation (a) to
become a party to and amend that certain Second Amended and Restated Loan and
Security Agreement by and between Sepco Industries, Inc. ("Sepco") and Fleet
Capital Corporation, a Rhode Island corporation ("Lender"),
successor-in-interest by merger to Fleet Capital Corporation, a Connecticut
corporation (Fleet Capital Corporation, a Connecticut Corporation having been
formerly known as Shawmut Capital Corporation and having been the
successor-in-interest by assignment to Barclays Business Credit, Inc.), (b) to
execute and deliver to Lender with such changes in the terms and provisions
thereof as the officer executing same shall, in his sole discretion, deem
advisable, (i) a certain proposed Third Amendment to Second Amended and
Restated Loan and Security Agreement to be executed by Corporation, Sepco and
Lender, a draft of which has been reviewed and discussed by the Board of
Directors of the Corporation, and (ii) such other agreements, instruments,
statements and writings as the officer or officers executing the same may deem
desirable or necessary in connection therewith, and (c) to perform such other
acts as the officer or officers performing such acts on behalf of the
Corporation may deem desirable or necessary in connection therewith; and be it
FURTHER RESOLVED: That said agreements will benefit the Corporation,
both directly and indirectly, and are in the best interests of the Corporation;
and be it
FURTHER RESOLVED: That said agreements and other statements in
writing executed in the name and on behalf of the Corporation by any officer of
the Corporation shall be presumed conclusively to be the instruments, the
execution of which is authorized by these resolutions; and be it
FURTHER RESOLVED: That the officers of the Corporation be, and the
same hereby are, authorized and directed to execute, in the name of and on
behalf of the Corporation, security agreements, financing statements,
assignments, collateral reports, loan statements, confirmations of delivery,
lien statements, pledge certificates, release certificates, removal reports,
guaranties, cross- collateralization agreements and such other writings and to
take such other actions as are necessary in their dealings with Lender, and any
such papers executed and any such actions taken by any of them prior to this
time are approved, ratified and confirmed; and be it
FURTHER RESOLVED: That the Secretary or any Assistant Secretary of
the Corporation, by the signature of any one or more of them, be, and the same
hereby are, authorized and directed to attest the execution by the Corporation
of the papers signed pursuant to these resolutions, to affix the seal of the
Corporation thereto, if required by Lender, and to certify to Lender the
adoption of these resolutions.
ANNEX A-2 TO THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 1
148
CERTIFICATION
The undersigned hereby certifies that the within and foregoing
resolutions are in effect as of the date hereof, without modification, and that
the person signing the within and foregoing Amendment on behalf of the
Corporation is the duly elected officer stated below his name, that he is
authorized to sign such Amendment, and that his signature thereon is genuine.
DATED: September 9, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A-2 TO THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
149
Exhibit "G"
to
Third Amendment to Second Amended and Restated
Loan and Security Agreement
Description of Creekmont, Houston, Texas Real Property
Lot(s) Twelve (12) in Block One (1) of ▇▇▇▇▇▇ HEIGHTS ACRES HOME SECTION NO.
ONE, an addition to ▇▇▇▇▇▇ County, Texas, according to the map or plat thereof
recorded in Volume 5, Page 28 of the Map Records of ▇▇▇▇▇▇ County, Texas.
150
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, has executed that certain Amended
and Restated Unconditional Guaranty, dated September 16, 1994 (the "Guaranty"),
in favor of FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"),
successor-in-interest by merger to Fleet Capital Corporation, a Connecticut
corporation (Fleet Capital Corporation, a Connecticut corporation, having
formerly been known as Shawmut Capital Corporation and having been the
successor-in-interest by assignment to Barclays Business Credit, Inc.). The
undersigned hereby (i) consents and agrees to the terms of the Third Amendment
to Second Amended and Restated Loan and Security Agreement, dated as of
September 9, 1996 (the "Loan Amendment"), by and among Sepco Industries, Inc.,
a Texas corporation, Bayou Pumps, Inc., a Texas corporation, and Lender, a copy
of which has been reviewed by the undersigned, (ii) agrees, effective as of the
date hereof, that the Guaranty is amended such that hereafter all references to
"Borrower" in the Guaranty shall, in addition to Sepco Industries, Inc., a
Texas corporation, also include Bayou Pumps, Inc., a Texas corporation, and
(iii) agrees that the Guaranty shall remain in full force and effect and shall
continue to be the legal, valid and binding obligation of the undersigned
enforceable against it in accordance with its terms. Furthermore, the
undersigned hereby agrees and acknowledges that (a) the obligations,
indebtedness and liabilities arising in connection with the Loan Amendment
comprise some, but not all, of the "Obligations" as such term is used in the
Guaranty, (b) the Guaranty is an "Other Agreement", as such term is defined in
the Loan Agreement, (c) the Guaranty, is not as of this date subject to any
claims, defenses or offsets, (d) nothing contained in the Loan Agreement or any
Other Agreement entered into prior to or as of the date hereof shall adversely
affect any right or remedy of Lender under the Guaranty, and (e) the execution
and delivery of the Loan Amendment shall in no way reduce, impair or discharge
any obligations of the undersigned as guarantor pursuant to the Guaranty and
shall not constitute a waiver by Lender of any of Lender's rights against the
undersigned.
Dated: September 9, 1996.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually
AGREED TO THIS 16
DAY OF September, 1996:
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Title: Vice President
-----------------------
CONSENT AND RATIFICATION TO THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 1
151
CONSENT, RATIFICATION AND AMENDMENT
The undersigned, ▇. ▇. ▇▇▇▇▇▇ BEARING CO., has executed (x) that
certain Amended and Restated Unconditional Guaranty, dated September 16, 1994
(the "Guaranty"), in favor of FLEET CAPITAL CORPORATION, a Rhode Island
corporation ("Lender"), successor-in-interest by merger to Fleet Capital
Corporation, a Connecticut corporation (Fleet Capital Corporation, a
Connecticut corporation, having been formerly known as Shawmut Capital
Corporation and having been the successor-in-interest by assignment to Barclays
Business Credit, Inc.), and (y) that certain Amended and Restated Security
Agreement, dated as of April 1, 1994, executed by the undersigned and Fleet
(the "Security Agreement"). The undersigned hereby (i) consents and agrees to
the terms of the Third Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of September 9, 1996 (the "Loan Amendment"), by
and among Sepco Industries, Inc., a Texas corporation, Bayou Pumps, Inc., a
Texas corporation, and Lender, a copy of which has been reviewed by the
undersigned, (ii) agrees, effective as of the date hereof, that the Guaranty is
amended such that hereafter all references to "Borrower" in the Guaranty shall,
in addition to Sepco Industries, Inc., a Texas corporation, also include Bayou
Pumps, Inc., a Texas corporation, (iii) agrees, effective as of the date
hereof, that the Security Agreement is amended such that hereafter the
definition of "Borrower" in the Security Agreement shall mean "each of Sepco
Industries, Inc., a Texas corporation, and Bayou Pumps, Inc., a Texas
corporation, and any and all successors and assigns thereof", and (iv) agrees
that each of the Guaranty and the Security Agreement shall remain in full force
and effect and shall continue to be the legal, valid and binding obligation of
the undersigned, enforceable against it in accordance with its terms.
Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations", as such term is
used in the Guaranty, and some, but not all, of the "Secured Indebtedness", as
such term is used in the Security Agreement, (b) each of the Guaranty and the
Security Agreement is an "Other Agreement", as such term is defined in the Loan
Agreement, (c) neither the Guaranty nor the Security Agreement is, as of the
date hereof, subject to any claims, defenses or offsets, (d) nothing contained
in the Loan Agreement or any Other Agreement entered into prior to or as of the
date hereof shall adversely affect any right or remedy of Lender under the
Guaranty or under the Security Agreement, and (e) the execution and delivery of
the Loan Amendment shall in no way reduce, impair or discharge any obligations
of the undersigned as guarantor pursuant to the Guaranty or as debtor pursuant
to the Security Agreement and shall not constitute a waiver by Lender of any of
Lender's rights against the undersigned.
Dated: September 9, 1996.
▇. ▇. ▇▇▇▇▇▇ BEARING CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: CEO
-----------------------------
AGREED TO THIS 16
DAY OF September, 1996:
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Title: Vice President
-----------------------
CONSENT AND RATIFICATION TO THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 2
152
CONSENT AND RATIFICATION
The undersigned, SOUTHERN ENGINE & PUMP COMPANY, has executed (x) that
certain Amended and Restated Unconditional Guaranty, dated September 16, 1994
(the "Guaranty"), in favor of FLEET CAPITAL CORPORATION, a Rhode Island
corporation ("Lender"), successor-in-interest by merger to Fleet Capital
Corporation, a Connecticut corporation (Fleet Capital Corporation, a
Connecticut corporation, having been formerly known as Shawmut Capital
Corporation and having been the successor-in-interest by assignment to Barclays
Business Credit, Inc.), and (y) that certain Amended and Restated Security
Agreement, dated as of April 1, 1994, executed by the undersigned and Fleet
(the "Security Agreement"). The undersigned hereby (i) consents and agrees to
the terms of the Third Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of September 9, 1996 (the "Loan Amendment"), by
and among Sepco Industries, Inc., a Texas corporation, Bayou Pumps, Inc., a
Texas corporation, and Lender, a copy of which has been reviewed by the
undersigned, (ii) agrees, effective as of the date hereof, that the Guaranty is
amended such that hereafter all references to "Borrower" in the Guaranty shall,
in addition to Sepco Industries, Inc., a Texas corporation, also include Bayou
Pumps, Inc., a Texas corporation, (iii) agrees, effective as of the date
hereof, that the Security Agreement is amended such that hereafter the
definition of "Borrower" in the Security Agreement shall mean "each of Sepco
Industries, Inc., a Texas corporation, and Bayou Pumps, Inc., a Texas
corporation, and any and all successors and assigns thereof", and (iv) agrees
that each of the Guaranty and the Security Agreement shall remain in full force
and effect and shall continue to be the legal, valid and binding obligation of
the undersigned, enforceable against it in accordance with its terms.
Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations", as such term is
used in the Guaranty, and some, but not all, of the "Secured Indebtedness", as
such term is used in the Security Agreement, (b) each of the Guaranty and the
Security Agreement is an "Other Agreement", as such term is defined in the Loan
Agreement, (c) neither the Guaranty nor the Security Agreement is, as of the
date hereof, subject to any claims, defenses or offsets, (d) nothing contained
in the Loan Agreement or any Other Agreement entered into prior to or as of the
date hereof shall adversely affect any right or remedy of Lender under the
Guaranty or under the Security Agreement, and (e) the execution and delivery of
the Loan Amendment shall in no way reduce, impair or discharge any obligations
of the undersigned as guarantor pursuant to the Guaranty or a debtor pursuant
to the Security Agreement and shall not constitute a waiver by Lender of any of
Lender's rights against the undersigned.
Dated: September 9, 1996.
SOUTHERN ENGINE & PUMP COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: CEO
-----------------------------
AGREED TO THIS 16
DAY OF September, 1996:
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Title: Vice President
-----------------------
CONSENT AND RATIFICATION TO THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 3
153
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇ LITTLE 1988 TRUSTS, has executed that
certain Amended and Restated Pledge Agreement dated September 16, 1994 (the
"Pledge Agreement"), in favor of FLEET CAPITAL CORPORATION, a Rhode Island
corporation ("Lender"), successor-in-interest by merger to Fleet Capital
Corporation, a Connecticut corporation (Fleet Capital Corporation, a
Connecticut corporation, having been formerly known as Shawmut Capital
Corporation and having been the successor-in-interest by assignment to Barclays
Business Credit, Inc.). The undersigned hereby (i) consents and agrees to the
terms of the Third Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of September 9, 1996 (the "Loan Amendment"), executed by
Sepco Industries, Inc., a Texas corporation, and Bayou Pumps, Inc., a Texas
corporation and Lender, a copy of which has been reviewed by the undersigned,
(ii) agrees, effective as of the date hereof, that the Pledge Agreement is
amended such that hereafter all references to "Borrower" in the Pledge
Agreement shall, in addition to Sepco Industries, Inc., a Texas corporation,
also include Bayou Pumps, Inc., a Texas corporation, and (iii) agrees that the
Pledge Agreement shall remain in full force and effect and shall continue to be
the legal, valid and binding obligation of the undersigned enforceable against
it in accordance with its terms. Furthermore, the undersigned hereby agrees
and acknowledges that (a) the obligations, indebtedness and liabilities arising
in connection with the Loan Amendment comprise some, but not all, of the
"Secured Indebtedness" as such term is used in the Pledge Agreement, (b) the
Pledge Agreement is an "Other Agreement" as such term is defined in the Loan
Agreement, (c) the Pledge Agreement, is not as of the date hereof subject to
any claims, defenses or offsets, (d) nothing contained in this Agreement or any
Other Agreement entered into prior to or as of the date hereof shall adversely
affect any right or remedy of Lender under the Pledge Agreement, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned pursuant to the Pledge Agreement
and shall not constitute a waiver by Lender of any of Lender's rights against
the undersigned.
Dated: September 9, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇
LITTLE 1988 TRUSTS
AGREED TO THIS 16
DAY OF September, 1996:
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Title: Vice President
-----------------------
CONSENT AND RATIFICATION TO THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 4
154
WHEN RECORDED, RETURN TO:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
MODIFICATION OF SECURED PROMISSORY NOTE AND
SECOND MODIFICATION TO DEED OF TRUST, SECURITY
AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF RENTS
[NUECES COUNTY, TEXAS]
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS
COUNTY OF NUECES )
THIS MODIFICATION OF SECURED PROMISSORY NOTE AND SECOND MODIFICATION
TO DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF
RENTS (this "Amendment") is entered into on September 9, 1996, but effective
for all purposes as of the 9th day of September, 1996, and is executed by SEPCO
INDUSTRIES, INC. ("Grantor"), a Texas corporation, with its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for
the benefit of FLEET CAPITAL CORPORATION ("Beneficiary"), a Rhode Island
corporation, with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ 21, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Beneficiary being the successor-in-interest by merger to Fleet
Capital Corporation, a Connecticut corporation (Fleet Capital Corporation, a
Connecticut corporation, having been formerly known as Shawmut Capital
Corporation, and having been the successor-in-interest by assignment to
Barclays Business Credit, Inc., a Connecticut corporation).
RECITALS
A. Grantor previously entered into that certain Deed of Trust,
Security Agreement, Financing Statement and Assignment of Rents dated January
22, 1992 and recorded at Volume 2347, Page 269 of the real property records of
Nueces County, Texas (as heretofore amended, including, without limitation, as
amended by the First Amendment to Deed of Trust [as hereinafter defined], the
"Deed of Trust"), pursuant to which Grantor granted to Barclays Business
Credit, Inc., a Connecticut corporation ("Barclays") various liens and security
interests on, among other things, the real property described on Exhibit A
attached hereto and incorporated herein by reference and all attachments,
fixtures and other property located thereon or related thereto (collectively,
the "Property").
155
B. Wesco Equipment, Inc. ("Wesco") was merged into Southern
Engine & Pump Company ("Sepco") on March 1, 1994, pursuant to that certain
Plan and Agreement of Merger - Wesco Equipment, Inc. Into Southern Engine &
Pump Company (the "Wesco Merger").
C. Sepco was merged into Grantor on March 1, 1994 pursuant to
that certain Plan and Agreement of Merger - Southern Engine & Pump Company Into
Sepco Industries, Inc. (the "Sepco Merger").
D. T. L. ▇▇▇▇▇▇ Bearing Co.("▇▇▇▇▇▇") was merged into DMS
Corporation ("DMS") on March 1, 1994 pursuant to that certain Plan and
Agreement of Merger - ▇.▇. ▇▇▇▇▇▇ Bearing Co. Into DMS Corporation (the "▇▇▇▇▇▇
Merger").
E. DMS was merged into Grantor on March 1, 1994 pursuant to that
certain Plan and Agreement of Merger - DMS Corporation Into Sepco Industries,
Inc. (the "DMS Merger"). The Wesco Merger, the Sepco Merger, the ▇▇▇▇▇▇ Merger
and the DMS Merger are collectively referred to herein as the "Mergers".
F. (i) Grantor and Barclays entered into that certain Second
Amended and Restated Loan Agreement, dated as of April 1, 1994, which amended,
restated, consolidated and combined (but did not extinguish) that certain
Amended and Restated Loan and Security Agreement, dated January 22, 1992, by
and between ▇▇▇▇▇▇ and Beneficiary (the "▇▇▇▇▇▇ Loan Agreement") and that
certain Amended and Restated Loan and Security Agreement, dated January 22,
1992, executed by Sepco and Barclays (the "Sepco Loan Agreement") into one
agreement in order to reflect the effect of the Mergers (such amended, restated
and combined loan agreement, as thereafter amended from time to time, is
hereinafter referred to as the "Loan Agreement"; and (ii) in order to preserve,
maintain and carry forward all of the liens and security interests previously
granted to Barclays in relation to the ▇▇▇▇▇▇ Loan Agreement, and Sepco Loan
Agreement and the other contracts, instruments, documents and agreements
executed in connection therewith, Grantor and Barclays modified the Deed of
Trust by executing that certain First Amendment to Deed of Trust, Security
Agreement, Financing Statement and Assignment of Rents, which was entered into
on September 16, 1994, but was effective for all purposes as of April 1, 1994,
and which was recorded on October 20, 1994, as Document No. 934157, of the real
property records of Nueces County, Texas (the "First Amendment to Deed of
Trust"), which First Amendment to Deed of Trust in part (x) modified the
definition of "Secured Indebtedness" contained in the Deed of Trust to
include, without limitation, all indebtedness, liabilities and obligations
incurred by Grantor arising under the Loan Agreement, the Term Note (as
hereinafter defined), and the Deed of Trust (hereinafter, the "Secured
Indebtedness"), and (y) modified the definition of Term Note to be that certain
Secured Promissory Note, dated as of April 1, 1994, in the original
principal amount of $1,329,277.37, executed by Grantor and payable to the order
of Barclays, and any and all renewals, modifications and extensions thereof
(hereinafter, the "Term Note") (the Deed of Trust, the Term Note, the Loan
Agreement and all other contracts, instruments, documents, and agreements
related thereto and/or executed in connection therewith being hereinafter
collectively referred to as the "Documents").
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156
G. All right, title and interest of Barclays in the Deed of
Trust, the Term Note and the other Secured Indebtedness was assigned by
Barclays to Fleet Capital Corporation, a Connecticut corporation, pursuant to
that certain Assignment of Deed of Trust, dated to be effective as of January
31, 1995, executed by Barclays, in favor of Fleet Capital Corporation, a
Connecticut corporation (then known as Shawmut Capital Corporation), and
recorded in the real property records of Neuces County, Texas.
H. Beneficiary, as successor-in-interest by merger to Fleet
Capital Corporation, a Connecticut corporation, succeeded on May 1, 1996, to
all right, title and interest of Fleet Capital Corporation, a Connecticut
corporation, in the Deed of Trust, the Term Note and the other Secured
Indebtedness.
I. Beneficiary is the present holder of all right, title and
interest in the Deed of Trust, the Term Note and the other Secured
Indebtedness.
J. Beneficiary and Grantor desire (i) that the indebtedness
evidenced by the Term Note be increased to reflect that as of the date hereof
Beneficiary and Grantor are converting a portion of the outstanding Revolving
Credit Loans (as defined in the Loan Agreement) into a term loan to be combined
with the term loan presently evidenced by the Term Note, such that such
combined term loan will be in the aggregate principal amount of $5,000,000, and
such combined term loan will hereafter be evidenced by the Term Note, as
modified hereby, (ii) to extend the maturity of the combined term loan
evidenced by the Term Note, as modified hereby, (iii) to revise the payment
terms of the combined term loan evidenced by the Term Note, as modified hereby,
and (iv) to modify certain other provisions of the Deed of Trust and the Term
Note.
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, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Unless otherwise defined herein, capitalized terms shall have
the meaning ascribed to them in the Deed of Trust.
ARTICLE II
AMENDMENTS
2.01 EXTENSIONS OF MATURITY OF TERM NOTE. The maturity of the Term
Note is hereby renewed and extended until January 2, 1999.
2.02 PRINCIPAL BALANCE OF TERM NOTE. Beneficiary and Grantor agree
that effective as of April 1, 1994, Beneficiary made to Grantor that certain
term loan in the original principal amount of $1,329,277.37, which term loan is
currently evidenced by the Term Note. Grantor
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157
further agrees, represents and warrants that as of the date of execution of
this Amendment, the unpaid principal amount of such term loan is $82,231.76 and
that there are no claims or offsets against, or defenses or counterclaims to,
payment of such amount to Beneficiary. Grantor further agrees, represents and
warrants that it has requested that Beneficiary convert $4,917,768.24 of the
principal amount of Revolving Credit Loans made to Grantor by Beneficiary which
are outstanding on the date hereof to a term loan, which term loan will be
combined and consolidated with the outstanding principal amount of the term
loan made to Grantor on April 1, 1994, such that the combined term loan shall
be in the aggregate principal amount of $5,000,000. Beneficiary and Grantor
hereby agree and acknowledge that such combined term loan in the aggregate
principal amount of $5,000,000 has been made by Beneficiary to Grantor and that
such combined $5,000,000 term loan shall hereafter be evidenced by the Term
Note, as modified by this Amendment. In furtherance of the foregoing,
Beneficiary and Grantor hereby amend the Term Note such that (i) each reference
in the Term Note to the dollar amount "$1,329,277.37" is deleted and
substituted therefor is the dollar amount "$5,000,000" and (ii) the reference
to the phrase "ONE MILLION, THREE HUNDRED TWENTY-NINE THOUSAND, TWO HUNDRED
SEVENTY-SEVEN AND 37/100 DOLLARS" is deleted and substituted therefor is the
clause "FIVE MILLION AND NO/100 DOLLARS".
2.03 INTEREST RATE PROVISIONS IN THE TERM NOTE. Beneficiary and
Grantor hereby further amend the Term Note as follows:
(a) The first paragraph on the first page of the Term
Note is amended by deleting therefrom the phrase "1.50% above the Base
Rate (the 'Annual Term Rate')," and substituting therefor the phrase
"the Applicable Annual Rate (as defined in the Loan Agreement)", and
each other reference in the Term Note to the words "Annual Term Rate"
is deleted and substituted therefor are the words "Applicable Annual
Rate".
(b) The last paragraph on page one of the Term Note (as
it carries forward on page two of the Term Note) is hereby amended and
restated to read in its entirety as follows:
"Borrower acknowledges and understands that the Base
Rate merely serves as a basis upon which effective rates of
interest are calculated for loans making reference to the per
annum rate of interest established by Bank from time to time
as its base rate and that such rate may not be the lowest or
best rate at which Bank calculates interest or extends credit.
Each portion of the outstanding principal amount of this Note
that is not a Eurodollar Loan (as defined in the Loan
Agreement) shall be increased or decreased, as the case may
be, by an amount equal to any increase or decrease in the Base
Rate, with such adjustments to be effective as of the opening
of business on the date that any such change in the Base Rate
becomes effective. The Base Rate in effect on the date hereof
shall be the Base Rate effective as of the opening of business
on the date hereof, but if this Note is executed on a day that
is not a Business Day, the Base Rate in effect on the date
hereof shall be the Base Rate effective as of the opening of
business on the last Business Day immediately preceding the
date hereof. The rate of interest
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in effect hereunder may be increased in accordance with the
provisions of the Loan Agreement. Interest on this Notice
shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 360 days); provided,
however, interest due at the Maximum Legal Rate shall be
calculated on the basis of actual days elapsed over a year of
365 or 366 days, as the case may be."
(c) The first full paragraph on page two of the Term Note
is amended by deleting therefrom the words "Base Rate" and
substituting therefor the words "Applicable Annual Rate".
2.04 PAYMENT TERMS. Effective as of the date of execution of this
Amendment, the last paragraph on page two of the Term Note is amended and
restated to read in its entirety as follows:
"The principal amount of and accrued interest on this Note
shall be due and payable on the dates and in the manner hereinafter
set forth:
(a) interest shall be due and payable monthly, in
arrears, on the first day of each month, commencing on August
1, 1996, and continuing until such time as the full principal
balance, together with all other amounts owing hereunder,
shall have been paid in full;
(b) principal shall be due and payable in equal
monthly installments of EIGHTY-THREE THOUSAND AND NO/100
DOLLARS ($83,000) each, commencing on August 1, 1998, and
continuing on the first day of each month thereafter to and
including the first day of December, 1998; and
(c) the entire unpaid principal balance hereof,
together with any and all other amounts due hereunder, shall
be due and payable on January 2, 1999."
2.05 PREPAYMENT PREMIUM. The Term Note is further amended (i) by
deleting the reference on page three to "Section 3.3(A)" and substituting
therefor a reference to "Section 3.3(B)" and (ii) by deleting the reference on
page three of the Term Note to the date "January 1, 1997" and substituting
therefor the date "January 1, 1999".
2.06 AMENDMENT TO SECTION 9.18(A) OF THE DEED OF TRUST. The first
portion of Section 9.18(A) of the Deed of Trust is hereby deleted therefrom and
the following is hereby substituted therefor:
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"(A) If to Beneficiary:
Fleet Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager"
ARTICLE III
NO WAIVER
3.01 Except as otherwise specifically provided for in this
Amendment, nothing contained herein shall be construed as a waiver by
Beneficiary of any covenant or provision of the Deed of Trust, the Term Note,
this Amendment, the Loan Agreement, or of any other Document, and Beneficiary's
failure at any time or times hereafter to require strict performance by Grantor
of any provision thereof shall not waive, affect or diminish any right of
Beneficiary to thereafter demand strict compliance therewith. Beneficiary
hereby reserves all rights granted under the Deed of Trust, the Term Note, this
Amendment, the Loan Agreement, the other Documents, and any other contract or
instrument between Grantor and Beneficiary.
ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
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 Term Note, the Deed of Trust, the Loan Agreement and the other
Documents, and, except as expressly modified and superseded by this Amendment,
the terms and provisions of the Term Note, the Deed of Trust, the Loan
Agreement and the other Documents are ratified and confirmed and shall continue
in full force and effect. Grantor and Beneficiary agree that the Deed of
Trust, as amended hereby, the Term Note, as amended hereby, the Loan Agreement
and the other Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
4.02 REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to Beneficiary that (a) the execution, delivery and performance of
this Amendment and any and all other Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Grantor and will not violate the Articles of Incorporation or
Bylaws of Grantor; (b) the representations and warranties contained in the Deed
of Trust, as amended hereby, the Term Note, as amended hereby, the Loan
Agreement and any other Loan Document are true and correct on and as of the
date hereof and on and as of the date of execution hereof as though made on and
as of each such date; (c) no Default or Event of Default under the Deed of
Trust, as amended hereby, the Term Note, as amended hereby, the Loan Agreement
or any other Loan Document has occurred and is continuing, unless such Default
or Event or Default has been specifically waived in writing by Beneficiary; and
(d) Grantor is in full compliance with all covenants and agreements contained
in the Deed of Trust, as amended hereby, the Term Note, as amended hereby, the
Loan Agreement and the other Documents, as amended hereby.
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ARTICLE V
MISCELLANEOUS PROVISIONS
5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in the Deed of Trust, the Term Note, the
Loan Agreement or any other Document, including, without limitation, any
document furnished in connection with this Amendment, shall survive the payment
in full of the Secured Indebtedness and the termination of Lender's obligation
to make Revolving Credit Loans under the Loan Agreement for a period of four
(4) years beyond the date of such payment in full and termination, and no
investigation by Beneficiary or any closing shall affect the representations
and warranties or the right of Beneficiary to rely upon them.
5.02 REFERENCE TO DEED OF TRUST AND TERM NOTE. Each of the Deed of
Trust, the Term Note, the Loan Agreement and the other Documents, 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 Deed of
Trust, as amended hereby, the Term Note, as amended hereby, the Loan Agreement
or any other Document are hereby amended so that any reference in the Deed of
Trust, the Term Note, the Loan Agreement or the other Documents to the Deed of
Trust shall mean a reference to the Deed of Trust as amended hereby, and to the
Term Note shall mean the Term Note, as amended hereby.
5.03 EXPENSES OF BENEFICIARY. As provided in the Loan Agreement,
Grantor agrees to pay on demand all costs and expenses incurred by Beneficiary
in connection with the preparation, negotiation and execution of this Amendment
and the other Documents to be executed in connection herewith and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Beneficiary's legal counsel, and all costs
and expenses incurred by Beneficiary in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby, or any
other Document, including, without limitation, the costs and fees of
Beneficiary's legal counsel.
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.
5.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of Beneficiary and Grantor and their respective
successors and assigns, except Grantor may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of
Beneficiary.
5.06 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.
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5.07 EFFECT OF WAIVER. No consent or waiver, express or implied,
by Beneficiary to or for any breach of or deviation from any covenant or
condition by Grantor shall be deemed a consent to or waiver of any other breach
of the same or any other covenant, condition or duty.
5.08 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
5.09 VALIDITY AND PRIORITY OF LIENS. All of the Property shall
remain in all respects subject to the lien, charge or encumbrance of the Deed
of Trust and nothing herein contained and nothing done pursuant hereto shall
affect or be construed to affect the lien, charge or encumbrance of the Deed of
Trust or the priority thereof over any other liens, charges or encumbrances or
to release or affect the liability of Grantor under or on account of the Term
Note, the Loan Agreement, or any other Document, nor shall anything herein
contained or done in pursuance hereof affect or be construed to affect any
other security for the Term Note held by Beneficiary.
5.10 APPLICABLE LAW. THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS
SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS
AMENDMENT.
5.11 FINAL AGREEMENT. THE DEED OF TRUST, AS AMENDED HEREBY, THE
TERM NOTE, AS AMENDED HEREBY, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE DEED OF TRUST, AS
AMENDED HEREBY, THE TERM NOTE, AS AMENDED HEREBY, THE LOAN AGREEMENT AND THE
OTHER DOCUMENTS 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. NO MODIFICATION, RESCISSION, WAIVER, RELEASE
OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A
WRITTEN AGREEMENT SIGNED BY GRANTOR AND BENEFICIARY.
5.12 RELEASE. GRANTOR 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 "SECURED INDEBTEDNESS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM BENEFICIARY. GRANTOR HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES BENEFICIARY, 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
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162
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 GRANTOR MAY NOW OR HEREAFTER HAVE AGAINST BENEFICIARY, 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
THE OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
Executed and effective as of the dates indicated above.
GRANTOR:
SEPCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
BENEFICIARY:
FLEET CAPITAL CORPORATION
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Title: Vice President
----------------------------------
EXHIBIT:
A - Property Description
9
▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
)
COUNTY OF ▇▇▇▇▇▇ )
This instrument was acknowledged before me on 9/11, 1996, by DRL, the
CEO of Sepco Industries, Inc., a Texas corporation, on behalf of said
corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
[NOTARY STAMP] Notary Public in and for
the State of ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Notary's Printed Name
My Commission Expires:
6/24/2000
--------------
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on 9/11, 1996, by H.
▇▇▇▇▇▇▇ ▇▇▇▇▇, the Vice President of Fleet Capital Corporation, a Rhode Island
corporation, on behalf of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
[NOTARY STAMP] -------------------------------------------
Notary Public in and for the State of Texas
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Notary's Printed Name
My Commission Expires:
03/06/00
------------------
10
164
EXHIBIT A
PROPERTY DESCRIPTION
Lot Fourteen (14), Block Two (2), ▇▇▇▇▇▇▇ INDUSTRIAL AREA, a Subdivision of the
City of Corpus Christi, Texas, as shown by the map or plat thereof recorded in
Volume 22, Page 36, Map Records of Nueces County, Texas.
Exhibit A - Page 1