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EXHIBIT 10.4
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
AND MODIFICATION TO OTHER AGREEMENTS
THIS AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT AND MODIFICATION TO OTHER AGREEMENTS (this "Amendment") is
made and entered into this 13th day of August, 1999, to be effective as of the
respective date herein indicated, by and among SEPCO INDUSTRIES, INC., a Texas
corporation ("Sepco"), BAYOU PUMPS, INC., a Texas corporation ("Bayou") and
AMERICAN MRO, INC., a Nevada corporation ("American") (Sepco, Bayou and American
being hereinafter individually and collectively referred to as "Borrower", as
governed by the provisions of Section 1.4, Section 1.5, and Section 1.6 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, and as amended by that certain Third
Amendment to Second Amended and Restated Loan and Security Agreement, dated
September 9, 1996, executed by Sepco, Bayou and Lender, and as amended by that
certain Fourth Amendment to Second Amended and Restated Loan and Security
Agreement, dated October 24, 1996, executed by Lender and Borrower, and as
amended by that certain letter agreement dated November 4, 1996, entered into by
Lender and Borrower, and as amended by that certain Fifth Amendment to Second
Amended and Restated Loan and Security Agreement, dated June 2, 1997, executed
by Lender and Borrower, and as amended by that certain Sixth Amendment to Second
Amended and Restated Loan and Security Agreement and Amendment to Other
Agreements executed by Borrower and Lender, and as amended by that certain
Seventh Amendment to Second Amended and Restated Loan and Security Agreement,
entered into on June 30, 1998, executed by Borrower and Lender, and as amended
by that certain Eighth Amendment to Second Amended and Restated Loan and
Security Agreement and Modification to Other Agreements, entered into on October
20, 1998, executed by Borrower and Lender, and as amended by that certain letter
agreement dated March 30, 1999, executed by Borrower and Lender, and as amended
by that certain letter agreement, dated May 13, 1999, executed by Borrower and
Lender (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.
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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LOAN AND SECURITY AGREEMENT - PAGE 1
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C. 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 AND MODIFICATION
Effective as of the respective date herein indicated, the Loan
Agreement and the Other Agreements are hereby respectively amended as follows:
2.01 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; ADDITION OF A NEW
DEFINITION "BLOCK AMOUNT". Effective as of the date of execution of this
Amendment, a new definition "Block Amount" is hereby added to Section 1.1 of the
Loan Agreement to read as follows:
"Block Amount - $1,250,000."
2.02 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT AND
RESTATEMENT OF THE DEFINITION OF "BORROWING BASE". Effective as of the date of
execution of this Amendment, Section 1.1 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:
"Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(a) Thirty-Six Million Eight Hundred Thousand Dollars
($36,800,000), minus the aggregate unpaid principal balance of
the Term Loan and of the Acquisition Term Loans at such date,
minus the aggregate face amount of all LC Guaranties and
Letters of Credit issued by Lender or Affiliates of Lender
outstanding at such date, minus the Block Amount 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) Twelve Million Five
Hundred Thousand Dollars ($12,500,000), or (B) 50% of
the value of Eligible
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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, and (C) the Block
Amount at such date.
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."
2.03 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT AND
RESTATEMENT OF THE DEFINITION OF "DOMESTIC MARGIN". Effective as of the date of
execution of this Amendment, the definition of "Domestic Margin" contained in
Section 1.1 of the Loan Agreement is amended and restated to read in its
entirety as follows:
"Domestic Margin - (i) as to the Revolving Credit Loans shall
mean 0.50% per annum, and (ii) as to the Term Loan and the Acquisition Term
Loans shall mean 1.00% per annum."
2.04 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT TO
DEFINITION OF "ELIGIBLE Accounts". Effective as of the date of execution of this
Amendment, the definition of "Eligible Account" contained in Section 1.1 of the
Loan Agreement is amended by amending and restating paragraph (o) of such
definition to read in its entirety as follows:
"(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; provided, however, that the foregoing provisions of this
paragraph (o) shall not apply to an Account arising in the ordinary
course of Borrower's business from the sale of goods or the rendition
of services in connection with a written contract between Borrower and
the relevant Account Debtor pursuant to which progress payments are
billed by the Borrower to the relevant Account Debtor; further
provided, however, that in order to be an Eligible Account, such billed
progress payment must otherwise constitute an Eligible Account pursuant
to the other provisions of the definition of `Eligible Account' and
that to the extent the aggregate amount of all such billed progress
payments exceed at any time $4,000,000, the billed progress payments in
excess of $4,000,000 shall not constitute Eligible Accounts; or".
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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2.05 AMENDMENT TO SECTION 2.2(A) OF THE LOAN AGREEMENT. Effective as of
the date of execution of this Amendment, Section 2.2(A) of the Loan Agreement is
amended by deleting therefrom the reference to the date "March 31, 2000" and
substituting therefor the date "March 31, 2001."
2.06 AMENDMENT TO SECTION 3.3(A) OF THE LOAN AGREEMENT. Effective as of
the date of execution of this Amendment, Section 3.3(A) of the Loan Agreement is
hereby amended by deleting therefrom the reference to the date "April 1, 2000"
and substituting therefor the date "April 1, 2001."
2.07 AMENDMENT TO SECTION 9.2 OF THE LOAN AGREEMENT; ADDING SECTION
9.2(S). Effective as of the date of execution of this Amendment, Section 9.2 of
the Loan Agreement is amended by adding thereto a new Section 9.2(S) to read in
its entirety as follows:
"(S) Fail by September 15, 1999, to deliver to Lender, a
written comprehensive plan (i) forecasting by month for the remaining
calendar year 1999 the consolidated income statement of DXP and its
Subsidiaries, and (ii) forecasting by month for the remaining calendar
year 1999 the consolidated balance sheet of DXP and its Subsidiaries,
and (iii) forecasting by month for the remaining calendar year 1999 the
consolidated statement of cash flows of DXP and its Subsidiaries."
2.08 AMENDMENT TO SECTION 9.3(E) OF THE LOAN AGREEMENT. Effective as of
the date of execution of this Amendment, Section 9.3(E) of the Loan Agreement is
amended and restated to read in its entirety as follows:
"(E) Maintain average Availability on a consolidated basis of
not less than $1,000,000. For purposes of meeting this requirement, up
to $1,000,000 of the Borrowing Base which is in excess of the combined
Commitments of DXP Acquisition, Inc., Pelican State Supply Company,
Inc. and Sepco Industries, Inc., Bayou Pumps, Inc. and American MRO,
Inc. can be used to meet this average Availability requirement."
2.09 EXTENSION OF MATURITY OF TERM NOTE. Effective as of the date of
execution of this Amendment, the maturity of the Term Note is hereby renewed and
extended until April 1, 2001.
2.10 AMENDMENT TO PAYMENT TERMS IN THE TERM NOTE. Borrower and Lender
hereby agree that 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 ton 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, continuing until such
time as the full principal balance, together with all other
amounts owing hereunder, shall have been paid in full;
(b) the principal shall be due and payable as
follows:
(i) Monthly installments of FIFTY-THREE
THOUSAND SIX AND 20/100 DOLLARS ($53,006.20) each
shall be due and payable on September 1, 1999,
October 1, 1999 and November 1, 1999; and
(ii) Monthly installments of ONE HUNDRED
THREE THOUSAND SIX AND 20/100 DOLLARS ($103,006.20)
each
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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shall be due and payable on December 1, 1999, and on
the first day of each month thereafter to and
including the first day of March, 2001; and
(c) the entire unpaid principal balance hereof,
together with any and all other amounts due hereunder, shall
be due and payable on April 1, 2001."
ARTICLE III
LIMITED WAIVER
3.01 Borrower has informed Lender that Borrower has violated the
following covenants contained in the Loan Agreement and has requested that
Lender waive such violations: (i) DXP and its Subsidiaries failed to maintain,
for the twelve calendar month period ending on June 30, 1999, a Fixed Charge
Ratio of not less than the relevant ratio provided for in Section 9.3(A) of the
Loan Agreement; (ii) DXP and its Subsidiaries failed to achieve, for the twelve
calendar month period ending on June 30, 1999, a Senior Interest Coverage Ratio
at least equal to the ratio set forth in Section 9.3(B) of the Loan Agreement;
(iii) DXP and its Subsidiaries failed to maintain, as of June 30, 1999, the
ratio of (a) Senior Debt of DXP and its Subsidiaries on such date to (b) an
amount equal to (x) the EBITDA of DXP and its Subsidiaries for the twelve
calendar month period ending on such date, minus (y) Capital Expenditures made
by DXP and its Subsidiaries during such period, of not greater than the ratio
set forth in Section 9.3(C) of the Loan Agreement; and (iv) DXP and its
Subsidiaries failed to maintain as of the end of the fiscal month ending April
30, 1999, the fiscal month ending May 31, 1999, and the fiscal month ending June
30, 1999, a Fixed Charge Ratio of not less than the relevant ratio set forth in
Section 9.3(D) of the Loan Agreement. Subject to the satisfaction of the
conditions precedent set forth in Section 4.01 of this Amendment and to the
other terms, conditions and provisions of this Amendment, Lender hereby waives
each of the above-described violations of the above-described Sections of the
Loan Agreement; provided, however, that the waiver described in this Section
3.01 of this Amendment is strictly limited to the Sections of the Loan Agreement
described above and to the specific occurrences described above. 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 in a manner
satisfactory to Lender, unless specifically waived in writing by Lender:
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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(a) Lender shall have received each of the following, each in
form and substance satisfactory to Lender, in its sole discretion, and,
where applicable, each duly executed by each party thereto, other than
Lender:
(i) This Amendment, duly executed by Borrower,
together with the relevant Consent, Ratification, and
Amendment, respectively duly executed by Xxxxx X. Xxxxxx,
individually, Xxxx X. Xxxxxxx, Trustee for Xxxxx Xxxxx Xxxxxx,
Xxxxxxxx Xxxxx Xxxxxx and Xxxxxx Xxx Little 1988 Trusts, DXP
Enterprises, Inc. ("Parent"), DXP Acquisition, Inc., d/b/a
Strategic Acquisition, Inc. and Pelican State Supply Company,
Inc.; and
(ii) All other documents Lender may request with
respect to any matter relevant to this Amendment or the
transactions contemplated hereby;
(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 otherwise
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. 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
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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, (g) Bayou has not amended its
Articles of Incorporation or its Bylaws since the date of incorporation of Bayou
and (h) American has not amended its Articles of Incorporation or its Bylaws
since the date of incorporation of American.
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.
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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.
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BORROWER"
SEPCO INDUSTRIES, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
BAYOU PUMPS, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
AMERICAN MRO, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
"LENDER"
FLEET CAPITAL CORPORATION
By: /s/ XXXXX XXXXXXXX
-------------------------------------
Name: Xxxxx XxxXxxxx
-------------------------------------
Title: Senior Vice President
-------------------------------------
ANNEXES:
A-1 - Certified Resolutions of Sepco Industries, Inc.
A-2 - Certified Resolutions of Bayou Pumps, Inc.
A-3 - Certified Resolutions of American MRO, Inc.
AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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 August 1999
Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements and to be executed by Corporation, Bayou Pumps,
Inc., American MRO, 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 AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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: August ____, 1999.
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A-1 TO AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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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.), as
thereafter amended (Corporation being a present party to such Second Amended and
Restated Loan and Security Agreement), (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 August
1999 Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements to be executed by Corporation, Sepco, American
MRO, 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-2 TO AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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13
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: August ____, 1999.
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A-2 TO AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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14
ANNEX A-3
CERTIFIED RESOLUTIONS OF
AMERICAN MRO, INC.'S BOARD OF DIRECTORS
RESOLVED: That any officer of American MRO, Inc., a Nevada 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 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 August 1999 Amendment to
Second Amended and Restated Loan and Security Agreement and Modification to
Other Agreements to be executed by Corporation, Sepco, 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-3 TO AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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LOAN AND SECURITY AGREEMENT - Page 1
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15
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: August ____, 1999.
----------------------------------------
[Assistant] Secretary of the Corporation
ANNEX A-3 TO AUGUST 1999 AMENDMENT TO SECOND AMENDED AND RESTATED
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16
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, XXXXX X. XXXXXX, 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 August 1999
Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements, dated on or about the date hereof (the "Loan
Amendment"), by and among Sepco Industries, Inc., a Texas corporation, Bayou
Pumps, Inc., a Texas corporation, American MRO, Inc., a Nevada corporation, 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: August 13, 1999.
/s/ XXXXX X. XXXXXX
-----------------------------
Xxxxx X. Xxxxxx, individually
CONSENT AND RATIFICATION TO AUGUST 1999 AMENDMENT TO
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SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 1
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17
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, XXXX X. XXXXXXX, TRUSTEE FOR XXXXX XXXXX XXXXXX,
XXXXXXXX XXXXX XXXXXX AND XXXXXX XXX 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 August
1999 Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements, dated on or about the date hereof (the "Loan
Amendment"), executed by Sepco Industries, Inc., a Texas corporation, Bayou
Pumps, Inc., a Texas corporation, American MRO, Inc., a Nevada corporation, 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: August 13, 1999.
/s/ XXXX X. XXXXXXX
--------------------------------------
XXXX X. XXXXXXX, TRUSTEE FOR
XXXXX XXXXX XXXXXX, XXXXXXXX
XXXXX XXXXXX AND XXXXXX XXX
LITTLE 1988 TRUSTS
CONSENT AND RATIFICATION TO AUGUST 1999 AMENDMENT TO
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SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 2
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18
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned has executed each of the following guaranty agreements
in favor of FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender")
(each such guaranty agreement being hereinafter referred to as a "Guaranty"):
(1) Continuing Guaranty Agreement [Indebtedness of Sepco
Industries, Inc.], dated as of October 24, 1996;
(2) Continuing Guaranty Agreement [Indebtedness of Bayou Pumps,
Inc.], dated as of October 24, 1996; and
(3) Continuing Guaranty Agreement [Indebtedness of American MRO,
Inc.], dated as of October 24, 1996.
The undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements, dated on or about the date hereof (the "Loan
Amendment"), by and among Sepco Industries, Inc., a Texas corporation, Bayou
Pumps, Inc., a Texas corporation, American MRO, Inc., a Nevada corporation, and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that each 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 each Guaranty, (b) each Guaranty is an
"Other Agreement", as such term is defined in the Loan Agreement, (c) no
Guaranty is 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 any 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 each Guaranty and shall not constitute a
waiver by Lender of any of Lender's rights against the undersigned.
Dated: August 13, 1999.
DXP ENTERPRISES, INC., formerly
known as Index, Inc.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO AUGUST 1999 AMENDMENT TO
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SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 3
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19
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned has executed each of the following guaranty agreements
in favor of FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender")
(each such guaranty agreement being hereinafter referred to as a "Guaranty"):
(1) Continuing Guaranty Agreement [Indebtedness of Sepco
Industries, Inc.], dated as of June 16, 1997;
(2) Continuing Guaranty Agreement [Indebtedness of Bayou Pumps,
Inc.], dated as of June 16, 1997; and
(3) Continuing Guaranty Agreement [Indebtedness of American MRO,
Inc.], dated as of June 16, 1997.
The undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements, dated on or about the date hereof (the "Loan
Amendment"), by and among Sepco Industries, Inc., a Texas corporation, Bayou
Pumps, Inc., a Texas corporation, American MRO, Inc., a Nevada corporation, and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that each 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 each Guaranty, (b) each Guaranty is an
"Other Agreement", as such term is defined in the Loan Agreement, (c) no
Guaranty is 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 any 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 each Guaranty and shall not constitute a
waiver by Lender of any of Lender's rights against the undersigned.
Dated: August 13, 1999
DXP ACQUISITION, INC., d/b/a
STRATEGIC ACQUISITION, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO AUGUST 1999 AMENDMENT TO
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SECOND AMENDED AND RESTATED LOAN AND SECURITY - Page 4
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20
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned has executed each of the following guaranty agreements
in favor of FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender")
(each such guaranty agreement being hereinafter referred to as a "Guaranty"):
(1) Continuing Guaranty Agreement [Indebtedness of Sepco
Industries, Inc.], dated as of May 29, 1997;
(2) Continuing Guaranty Agreement [Indebtedness of Bayou Pumps,
Inc.], dated as of May 29, 1997; and
(3) Continuing Guaranty Agreement [Indebtedness of American MRO,
Inc.], dated as of May 29, 1997.
The undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Second Amended and Restated Loan and Security Agreement and
Modification to Other Agreements, dated on or about the date hereof (the "Loan
Amendment"), by and among Sepco Industries, Inc., a Texas corporation, Bayou
Pumps, Inc., a Texas corporation, American MRO, Inc., a Nevada corporation, and
Lender, a copy of which has been reviewed by the undersigned, and (ii) agrees
that each 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 each Guaranty, (b) each Guaranty is an
"Other Agreement", as such term is defined in the Loan Agreement, (c) no
Guaranty is 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 any 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 each Guaranty and shall not constitute a
waiver by Lender of any of Lender's rights against the undersigned.
Dated: August 13, 1999.
PELICAN STATE SUPPLY
COMPANY, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO AUGUST 1999 AMENDMENT TO
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