Exhibit 10(c)
AMENDMENT NO. 5
TO LOAN AND SECURITY AGREEMENT
AND OTHER TRANSACTION DOCUMENTS
The Loan and Security Agreement dated June 11, 1997, between OTR EXPRESS,
INC., as Debtor, and HSBC BUSINESS LOANS, INC. (now known as HSBC Business
Credit (USA) Inc.), as Secured Party (the Loan and Security Agreement, as
amended from time to time, is hereinafter referred to as the "Loan Agreement"),
and the Transaction Documents (as defined in the Loan Agreement), are hereby
amended as follows:
RECITALS
A. Debtor has requested that Secured Party amend the Loan Agreement and
the other Transaction Documents by (i) amending the Tangible Net Worth
covenant, and (ii) amending the Leverage Ratio covenant; and
B. Secured Party is willing to agree to the requested amendments, but only
if Debtor executes and delivers this Amendment to Secured Party.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants of the parties, the parties agree as follows:
1. Debtor acknowledges and agrees that the security interests and liens
granted by Debtor to Secured Party under the Loan Agreement and the other
Transaction Documents remain first and valid security interests in and liens on
the Collateral. Debtor represents and warrants that as of the date of this
Amendment, there are no claims, setoffs or defenses to Secured Party's exercise
of any rights or remedies available to Secured Party under the Transaction
Documents.
2. The Loan Agreement and the other Transaction Documents are hereby
amended in the following respects:
a. Item 30(a) of the Schedule to the Loan Agreement is hereby
deleted and the following is inserted in place thereof:
"(a) Minimum Tangible Net Worth: Debtor shall maintain a
minimum Tangible Net Worth in the amounts set forth
below for the time periods set forth below:
Amount Time Period
$6,600,000.00 6/30/00
$6,600,000.00 9/30/00
$6,400,000.00 12/31/00 and thereafter
"Tangible Net Worth" means the sum of stockholders' equity plus the
principal balance of any debt that is subordinated to the
Indebtedness in a manner satisfactory to Secured Party, minus the
book value of Intangible Assets (as defined below), plus the
amount by which Debtor's Tangible Net Worth has been reduced as a
result of sales by Debtor of used tractors or trailers at a loss
on or after July 31, 2000 (so long as the terms of such sale were
approved in advance by Secured Party in writing), provided,
however, that the aggregate amount of losses added to the
stockholder's equity in arriving of Debtor's Tangible Net Worth
shall in no event exceed $750,000.00, all of the foregoing to be
determined in accordance with generally accepted accounting
principles consistently applied.
"Intangible Assets" means (1) all loans or advances to, and other
Receivables owing from, any employee or Affiliate, other than
advances of expenses to drivers in the ordinary course of business
not to exceed $400,000.00 in the aggregate outstanding at any one
time, (2) all investments, whether in a subsidiary or otherwise,
(3) goodwill, (4) any other assets deemed intangible under
generally accepted accounting principles, and (5) any other assets
determined to be intangible by Secured Party in its reasonable
credit judgment.
The foregoing Tangible Net Worth covenant shall be tested for compliance
at the end of each calendar quarter."
b. Item 30(b) of the Schedule to the Loan Agreement is hereby
deleted and the following is inserted in place thereof:
(b) Leverage Ratio: Debtor shall maintain a Leverage Ratio
(as defined below) of not greater than the following
ratios for the applicable time periods, determined in
accordance with generally accepted accounting
principles consistently applied:
Ratio Time Period
8 to 1 6/30/00
7.5 to 1 9/30/00
7.5 to 1 12/31/00 and thereafter
"Leverage Ratio" means the ratio of Debtor's total liabilities
(excluding indebtedness of Debtor for borrowed money that is
subordinated in writing to the Indebtedness in form acceptable to
Secured Party) to Tangible Net Worth (as defined above).
The foregoing Leverage Ratio shall be tested for compliance with
this covenant at the end of each calendar quarter."
3. Debtor agrees that on or before October 31, 2000, Debtor shall
provide to Secured Party Debtor's financial projections for calendar year 2001
in form satisfactory to Secured Party (the "Projections"). Failure by Debtor
to comply with the preceding sentence shall constitute an Event of Default.
Based on the Projections, Secured Party shall set Tangible Net Worth, Leverage
Ratio and Debt Service Coverage Ratio covenants for calendar year 2001 and
Debtor and Secured Party shall enter into an amendment to the Loan Agreement
and the other Transaction Documents in form acceptable to Secured Party to
implement such financial covenants.
4. Debtor and Secured Party agree that effective August 1, 2000, Secured
Party has established a $1,000,000.00 reserve against Receivables pursuant to
Section 2.3 of the Loan Agreement. The amount of such reserve will be
subtracted from the Receivables Borrowing Base when calculating the amount of
the Borrowing Capacity.
5. Debtor represents and warrants to Secured Party that as of the date
of this Amendment:
a. Except as disclosed in writing to Secured Party on the date
hereof, Debtor is not in default under the terms and provisions of the
Loan Agreement or any other Transaction Document. No Event of Default,
nor any condition, event, act or omission which with notice or lapse of
time, or both, would become an Event of Default, exists under the terms
and provisions of the Loan Agreement or the other Transaction Documents.
b. Debtor is duly organized, validly existing and in good standing
under the laws of the State of Kansas.
c. The execution, delivery and performance by Debtor of this
Amendment have been duly authorized by all necessary corporate action
and have received the requisite corporate approvals.
d. This Amendment constitutes the valid and legally binding
obligation of Debtor and is enforceable against Debtor in accordance
with its terms.
e. The execution and delivery of this Amendment shall not
constitute a violation of, or default under, or conflict with any term
or provision of any contract, lease or other agreement to which Debtor
is a party or by which Debtor is bound. Debtor is not in default under
any material contract or agreement to which it is a party or by which it
is bound, or to which any of this property is subject, nor has any event
occurred which after the giving of notice or the passage of time, or
both, would constitute a default under any such contract or agreement
other than those which have been waived by the non-defaulting party or
satisfied by Debtor.
6. Except as specifically amended or modified herein, all of the terms,
conditions and covenants contained in the Loan Agreement and the other
Transaction Documents shall remain in full force and effect and are hereby
fully ratified and confirmed. If and to the extent that any of the terms and
provisions of the Loan Agreement and the other Transaction Documents, as
originally executed and previously amended, are in conflict with or
inconsistent with any of the terms and provisions of this Amendment, this
Amendment shall govern. All Transaction Documents shall be deemed amended to
be consistent with the terms of this Amendment.
7. Debtor agrees that it has no defenses, setoffs or counterclaims to
Secured Party's enforcement of its rights and remedies under the Loan
Agreement and the other Transaction Documents.
8. Capitalized terms used in this Amendment shall have the same meanings
as specified in the Loan Agreement, except as otherwise expressly provided
herein.
9. The terms and conditions of this Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
10. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT DEBTOR AND SECURED PARTY FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED COVERING SUCH
MATTERS ARE CONTAINED IN THE TRANSACTION DOCUMENTS, WHICH ARE THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS THEY MAY
LATER AGREE IN WRITING TO MODIFY IT.
IN WITNESS WHEREOF, this Amendment No. 5 to Loan and Security Agreement and
Other Transaction Documents (the "Amendment") has been executed by the parties
as of the 4th day of August, 2000.
DEBTOR:
OTR EXPRESS, INC.
By:/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
President and Chief
Executive Officer
By:/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President and Chief
Financial Officer
SECURED PARTY:
HSBC BUSINESS CREDIT (USA) INC.
(formerly known as HSBC Business Loans Inc.)
By: /s/ M. Xxxxxxxxx Xxxxxx
M. Xxxxxxxxx Xxxxxx
Vice President
