EXHIBIT 10.3
AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT is dated
as of the 1st day of October, 1998, by and among PRECISION AUTO CARE, INC., a
Virginia corporation ("PAC"), WE JAC CORPORATION, a Delaware corporation; ROCKY
MOUNTAIN VENTURES, INC., a Colorado corporation; ROCKY MOUNTAIN VENTURES II,
INC., a Colorado corporation; XXXXXXX CAR WASH LTD., a Colorado limited
liability company; PREMA PROPERTIES, LTD., an Ohio limited liability company;
MIRACLE INDUSTRIES, an Ohio corporation; KBG, LLC, a Colorado limited liability
company; PTW, INC., a Washington corporation; NATIONAL 60 MINUTE TUNE, INC., a
Washington corporation; HYDRO-SPRAY CAR WASH EQUIPMENT CO., LTD., an Ohio
limited liability company; PRECISION TUNE AUTO CARE, INC., a Virginia
corporation; WORLDWIDE DRYING SYSTEMS, INC., a Colorado corporation; PAC MEXICAN
DELAWARE HOLDING COMPANY, INC., a Delaware corporation; PAC MEXICAN DELAWARE
HOLDING COMPANY, LLC, a Virginia limited liability company; PRECISION AUTO CARE
MEXICO II, S. de X.X. de C.V., a Mexican limited liability company; PRECISION
AUTO CARE MEXICO I, S. de X.X. de C.V., a Mexican limited liability company; and
INDY VENTURES, L.L.C., an Indiana limited liability company (PAC and each of
such Persons are sometimes hereafter referred to individually as a "Borrower"
and collectively as the "Borrowers"), and FIRST UNION NATIONAL BANK, successor
by merger to Signet Bank (the "Bank").
RECITALS
Reference is made to that certain Loan and Security Agreement
dated November 12, 1997, by and among the Borrowers and the Bank, as
supplemented from time to time by certain Assumption Agreements, and as amended
by that certain Amendment No. 1 to Loan and Security Agreement dated as of March
31, 1998, and by that certain Amendment No. 2 to Loan and Security Agreement
dated as of May 12, 1998 (as supplemented and amended, the "Loan Agreement"),
pursuant to which the Bank agreed to extend to the Borrowers a Line of Credit
and an Acquisition Line of Credit in the aggregate principal amount not to
exceed Twenty-Five Million Dollars ($25,000,000). In order to further amend the
Loan Agreement as provided herein, the parties hereto have entered into this
Amendment No. 3.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth herein, and such other consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. All capitalized terms not otherwise defined
herein which are defined in the Loan Agreement shall have the same meanings
assigned to them in the Loan Agreement.
2. All references herein, in the Loan
Agreement and in the Consolidated Note to "this Loan Agreement", "this
Agreement", "the Loan Agreement" and "the Agreement" shall mean and include the
Loan Agreement as amended by this Amendment No. 3.
3. Section 1.13 of the Loan Agreement is hereby
amended to read in its entirety as follows:
Section 1.13. Applicable Margin. The term
"Applicable Margin" shall mean, at any time with respect to any Loan, the
applicable percentage points as determined under the following matrix with
reference to the ratio of Total Funded Debt to Annualized EBITDA, each for the
most recent fiscal quarter then ended, calculated as provided below:
Ratio of Total Funded Debt to Annualized EBITDA for the Applicable Margin Applicable Margin
Quarter then Ended (Base Rate) (LIBOR Rate)
------------------------------------------------------- ----------- ------------
Less than or equal to 4.5 to 1.0 but greater than 4.0 to 1.0 0.75% 2.75%
Less than or equal to 4.0 to 1.0 but greater than 3.5 to 1.0 0.75% 2.50%
Less than or equal to 3.5 to 1.0 but greater than 3.0 to 1.0 0.50% 2.25%
Less than or equal to 3.0 to 1.0 but greater than 2.5 to 1.0 0.25% 2.00%
Less than or equal to 2.5 to 1.0 but greater than 2.0 to 1.0 0.00% 1.75%
Less than or equal to 2.0 to 1.0 but greater than 1.5 to 1.0 0.00% 1.50%
Less than or equal to 1.5 to 1.0 0.00% 1.25%
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4. Section 1.24A of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 1.24A. Consolidated Note. The term "Consolidated Note"
shall mean the Second Consolidated, Amended and Restated
Revolving and Acquisition Line of Credit Promissory Note dated
October 1, 1998, executed by the Borrowers as obligors, in
the original principal amount of Twenty-Five Million Dollars
($25,000,000) and payable to the order of the Bank, and any
and all substitutions, extensions, renewals, amendments,
restatements, modifications or replacements thereof.
5. Section 1.41 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 1.41. Maturity. The term "Maturity" shall mean
September 30, 1999, the date on which all Loans and
Obligations, all accrued interest, and all other fees, costs
and expenses provided for herein, in the Consolidated Note or
the other Loan Documents shall be due and payable, in full, or
such earlier date upon acceleration as provided herein or in
the Consolidated Note.
7. Section 1.41A of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 1.41A. Maximum Loan Amount. The term "Maximum Loan
Amount" shall mean the sum of (a) the Line of Credit Portion
(as defined in Section 2.1 hereof), plus (b) the outstanding
principal balance of the Acquisition Line of Credit. The
Maximum Loan Amount is subject to reduction in the manner
provided in Section 2.4 hereof, and from and after January 31,
1999, the Maximum Loan Amount shall be Fifteen Million Dollars
($15,000,000) minus the amount of the Outstanding Letter of
Credit Obligations.
8. Article I of the Loan Agreement is hereby amended to
add the following new Section 1.41B:
Section 1.41B. Net CARS Transaction Proceeds. The term "Net
CARS Transaction Proceeds" shall mean the gross proceeds
payable to or for the account of the Borrowers in connection
with the proposed sale by the Borrowers to Capital Automotive
REIT of approximately 17 auto wash locations in Colorado, Ohio
and Indiana, and the leaseback of such locations by the
Borrowers (the "CARS Transaction"), minus the reasonable and
customary transaction costs payable by the Borrowers in
connection with the closing thereof.
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9. Article I of the Loan Agreement is hereby amended to
add the following new Section 1.41C:
Section 1.41B. Net Mortgage Loan Proceeds. The term "Net
Mortgage Loan Proceeds" shall mean the gross proceeds to or
for the account of any of the Borrowers in connection with any
transaction pursuant to which any real property of any of the
Borrowers has been encumbered or otherwise made subject to any
lien, minus the reasonable and customary transaction costs
payable by the Borrowers in connection therewith.
10. Section 1.59 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 1.59. Unused Line Fee. The term "Unused
Line Fee" shall mean the amount determined by multiplying the average daily
unborrowed amount of the Line of Credit Portion by the fee percentage calculated
from the following matrix with reference to the Total Funded Debt/Annualized
EBITDA ratio for the most recently completed fiscal quarter for which a
Compliance Certificate has been received and approved by the Bank.
Ratio of Total Funded
Debt for the Quarter then Ended to
Annualized EBITDA Fee Percentage
---------------------------------- --------------
Less than or equal to 4.5 to 1.0 but greater than 3.0 to 1.0 0.50%
Less than or equal to 3.0 to 1.0 but greater than 2.0 to 1.0 0.30%
Less than or equal to 2.0 to 1.0 0.25%
11. Section 2.1 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.1. The Line of Credit Loan. The Bank agrees to make
Advances to PAC under the Line of Credit during the term of
this Agreement in an amount not to exceed Eleven Million
Dollars ($11,000,000) minus the amount of the Outstanding
Letter of Credit Obligations (the "Line of Credit Portion");
provided, however, that the Line of Credit Portion is subject
to reduction in the manner provided in Section 2.4 hereof. The
obligation of the Borrowers to repay the Advances under the
Line of Credit shall be evidenced by the Consolidated Note.
Subject to the limitations provided herein, the Borrowers may
borrow, repay and reborrow under the Line of Credit and under
the Consolidated Note.
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12. Section 2.1.6 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.1.6. Repayment of the Line of Credit. The Borrowers
shall pay accrued interest on the outstanding principal
balance of the Line of Credit on the first day of each month,
commencing January 1, 1998. The Borrowers promise to pay to
the order of the Bank all principal, accrued interest, all
Unused Line Fees and other costs and expenses arising under
the Line of Credit, this Agreement and all other Obligations,
at Maturity; provided, however, that (a) the outstanding
principal balance of the Line of Credit is subject to
mandatory prepayment as further provided in Section 2.4
hereof, (b) if at any time the principal amount outstanding
under the Line of Credit exceeds the Line of Credit Portion,
then the Borrowers shall immediately pay over a sum equal to
the amount by which such outstanding principal exceeds the
Line of Credit Portion, plus accrued interest to the date of
prepayment, and (c) upon the occurrence of an Event of
Default, subject to any applicable grace or cure period, the
entire outstanding and unpaid principal balance of the Line of
Credit Loan, together with the accrued interest thereon to the
date of payment, shall be immediately due and payable at the
option of the Bank. Interest shall be payable monthly
following preparation by the Bank of an interest statement
showing interest and the Unused Line Fee due through the end
of the monthly payment period. In the event interest for the
final days of any period are estimated, PAC's Deposit Account
shall be debited or credited, as the case may be, to reflect
actual interest due through the end of such period. The Bank
shall automatically debit the PAC's Deposit Account on the due
date of, and in the amount of, the interest and the Unused
Line Fee shown to be due on each monthly statement.
13. Section 2.1.7 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.1.7. Prepayment of the Line of Credit.
(a) Optional Prepayment. The Borrowers may prepay the
Line of Credit in whole or in part at any time and from time
to time without penalty or additional interest. The Line of
Credit may be reduced, from time to time, to a zero balance
without affecting the continuing validity of this Agreement or
the continuing security interest and lien of the Bank in and
to the Collateral.
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(b) Mandatory Prepayment. The Borrowers shall be
required to prepay the Line of Credit and to permanently
reduce the Line of Credit Portion in accordance with the
provisions of Section 2.4 hereof.
14. Section 2.2.1 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.2.1. The Acquisition Line of Credit Loan. Subject to
the provisions of this Agreement, the Bank agrees to make
Advances to PAC under the Acquisition Line of Credit through
September 30, 1998, in an aggregate principal amount
outstanding at any one time not to exceed Fourteen Million
Dollars ($14,000,000). The obligation of the Borrowers to
repay the Advances under the Acquisition Line of Credit shall
be evidenced by the Consolidated Note. From and after
October 1, 1998, amounts repaid under the Consolidated Note
with respect to the Acquisition Line of Credit may not be
reborrowed.
15. Section 2.2.2 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.2.2. Purpose of the Acquisition Line of Credit. The
proceeds of Advances under the Acquisition Line of Credit
shall be used by PAC or designated Borrowers for the financing
of Permitted Acquisitions and other Acquisitions approved by
the Bank; provided, however, that notwithstanding anything to
the contrary contained in this Agreement or in any of the
other Loan Documents, from and after October 1, 1998 (a) no
additional Advances under the Acquisition Line of Credit shall
be requested or made, and (b) no further Domestic
Acquisitions, Foreign Acquisitions, Permitted Acquisitions or
other Acquisitions shall be made without the prior written
consent of the Bank, which may be given or withheld by the
Bank in its sole discretion.
16. Section 2.2.6 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.2.6. Repayment of the Acquisition Line of Credit.
The Borrowers promise to pay to the order of the Bank all
principal, accrued interest, all Unused Line Fees and other
costs and expenses arising under the Acquisition Line of
Credit, this Agreement and all other Obligations, at Maturity.
Interest on all outstanding Advances under the Acquisition
Line of Credit Note shall be payable on the first day of each
month, commencing January 1, 1998, and the outstanding
principal balance of each Advance under the Acquisition Line
of Credit shall be repaid in consecutive equal monthly
principal installments commencing in the month following the
month in which such Advance was made and extending over a term
not to exceed sixty (60) months, as elected by PAC at the time
such Advance is requested; provided, however, that (a) in the
absence of any requested repayment term by PAC, the repayment
term shall be sixty (60) months, (b) the outstanding principal
balance of
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the Acquisition Line of Credit is subject to mandatory
repayment prior to February 1, 1999, as further provided in
Section 2.4 hereof, (c) the aggregate outstanding principal
balance of all Advances under the Acquisition Line of Credit
on the earlier of (i) the first day of the first month
following the application of the Net CARS Transaction Proceeds
or the Net Mortgage Loan Proceeds to the Acquisition Line of
Credit as provided in Section 2.4 hereof, or (ii) February 1,
1999 (such outstanding balance on such date, the "Amortization
Balance"), shall be repaid in consecutive equal monthly
principal installments due on the first (1st) day of each
month commencing on the date the Amortization Balance is
determined, each of which shall be in the amount of
one-sixtieth (1/60th) of the Amortization Balance, (d) if at
any time the principal amount outstanding under the
Acquisition Line of Credit exceeds the maximum amount
permitted under Section 2.2.1 hereof, then the Borrowers shall
immediately pay over a sum equal to the amount by which such
outstanding principal exceeds such amount, plus accrued
interest to the date of prepayment, which shall be applied as
a prepayment of the Advance under the Acquisition Line of
Credit most recently extended, (e) all principal, plus
interest and other sums due under the Acquisition Line of
Credit shall be absolutely due and payable at Maturity, and
(f) upon the occurrence of an Event of Default, subject to any
applicable grace or cure period, the entire outstanding and
unpaid principal balance of the Acquisition Line of Credit
Loan, together with the accrued interest thereon to the date
of payment, shall be immediately due and payable at the option
of the Bank. Interest shall be payable monthly following
preparation by the Bank of an interest statement showing
interest and the Unused Line Fee due through the end of the
monthly payment period. In the event interest for the final
days of any period are estimated, PAC's Deposit Account shall
be debited or credited, as the case may be, to reflect actual
interest due through the end of such period. The Bank shall
automatically debit the PAC's Deposit Account on the due date
of, and in the amount of, the interest and the Unused Line Fee
shown to be due on each monthly statement.
17. Section 2.2.7 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 2.2.7. Prepayment of the Acquisition Line of Credit.
(a) Optional Prepayment. The Borrowers may prepay the
Acquisition Line of Credit in whole or in part at any time and
from time to time without penalty or additional interest.
(b) Mandatory Prepayment. The Borrowers shall be required
to prepay the Acquisition Line of Credit in accordance with
the provisions of Section 2.4 hereof.
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18. A new Section 2.4 is hereby added to the Agreement to
read in its entirety as follows:
Section 2.4. Mandatory Repayments and Prepayments. The
Borrowers shall, on the date of receipt (or if not
practicable, promptly following such receipt) by it of any Net
Mortgage Loan Proceeds or Net CARS Transaction Proceeds
received on or before January 31, 1999, apply 100% of such
Proceeds (a) first, to make a mandatory prepayment of the
Acquisition Line of Credit until the unpaid principal balance
thereof shall have been reduced to Ten Million Dollars
($10,000,000), and (b) second, to make a mandatory prepayment
of the Line of Credit until the unpaid principal balance
thereof plus the Outstanding Letter of Credit Obligations
shall have been reduced to Five Million Dollars ($5,000,000);
provided, however, that (i) the Borrowers shall be required to
obtain the prior written consent of the Bank (A) pursuant to
Section 7.3 hereof to any transaction which will result in the
receipt of Net Mortgage Loan Proceeds, and (B) pursuant to
Section 7.2 hereof to any transaction which will result in the
receipt of Net CARS Transaction Proceeds, and (ii) on January
31, 1999, the Borrowers shall be required to prepay (x) the
Acquisition Line of Credit in an amount sufficient to reduce
the outstanding principal balance thereof to not more than Ten
Million Dollars ($10,000,000), and (b) the Line of Credit in
an amount sufficient to reduce the outstanding principal
balance thereof plus the Outstanding Letter of Credit
Obligations to not more than Five Million Dollars
($5,000,000). All mandatory prepayments of the Line of Credit
pursuant to this Section 2.4 shall permanently reduce the Line
of Credit Portion and may not be reborrowed; provided,
further, that (a) the Line of Credit Portion shall not be
reduced below an amount which, when added to the Outstanding
Letter of Credit Obligations, would be less than Five Million
Dollars ($5,000,000), and (b) on and after February 1, 1999,
the Line of Credit Portion shall equal Five Million Dollars
($5,000,000) minus the Outstanding Letter of Credit
Obligations. All prepayments pursuant to this Section 2.4
shall be made without premium or penalty.
19. Section 6.16(c) of the Loan Agreement is hereby
amended to read in its entirety as follows:
(c) As soon as practicable and in any event within thirty (30)
days after the end of each calendar month, a combined
statement of income and retained earnings of the Borrowers for
such period and for the period from the beginning of the
current fiscal year of PAC to the end of each period, all in
detail and scope satisfactory to the Bank, prepared in
accordance with GAAP consistently applied, certified as true
and complete by the chief financial officer of PAC and
accompanied by a certificate of that officer demonstrating
compliance with each of the covenants contained in Sections
6.17, 6.18, and 6.19, as applicable with respect to covenants
tested on a quarterly basis.
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20. Section 6.17 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 6.17. Total Funded Debt/Annualized EBITDA Ratio. The
Borrowers shall maintain on a consolidated basis, a Total
Funded Debt/Annualized EBITDA Ratio of less than (a) 4.50 to
1.0 as of the end the fiscal quarter ending September 30,
1998, (b) 4.50 to 1.00 as of the end the fiscal quarter ending
December 31, 1998, (c) 4.25 to 1.00 as of the end the fiscal
quarter ending March 31, 1999, and (d) 3.00 to 1.00 as of the
end the fiscal quarter ending June 30, 1999; provided,
however, that in the event the CARS Transaction is
consummated, in lieu of the requirements in clauses (b), (c)
and (d) above, the Borrowers shall be required to maintain on
a consolidated basis, a Total Funded Debt/Annualized EBITDA
Ratio of less than (x) 3.75 to 1.0 as of the end the fiscal
quarter ending December 31, 1998, (y) 3.50 to 1.0 as of the
end the fiscal quarter ending March 31, 1999, and (z) 2.50 to
1.00 as of the end the fiscal quarter ending June 30, 1999.
21. Section 6.18 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 6.18. Consolidated Liabilities to Tangible Net Worth
Ratio. The Borrowers shall maintain on a consolidated basis a
ratio of Consolidated Liabilities to Consolidated Tangible Net
Worth of less than (a) 7.00 to 1.0 as of the end the fiscal
quarter ending September 30, 1998, (b) 6.75 to 1.00 as of the
end the fiscal quarter ending December 31, 1998, (c) 5.75 to
1.00 as of the end the fiscal quarter ending March 31, 1999,
and (d) 4.75 to 1.00 as of the end the fiscal quarter ending
June 30, 1999; provided, however, that in the event the CARS
Transaction is consummated, in lieu of the requirements in
clauses (b), (c) and (d) above, the Borrowers shall be
required to maintain on a consolidated basis, a ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth of
less than (x) 5.50 to 1.0 as of the end the fiscal quarter
ending December 31, 1998, (y) 4.50 to 1.0 as of the end the
fiscal quarter ending March 31, 1999, and (z) 3.75 to 1.00 as
of the end the fiscal quarter ending June 30, 1999.
22. Section 6.19 of the Loan Agreement is hereby amended
to read in its entirety as follows:
Section 6.19. Annualized EBITDAR Ratio. The Borrowers shall
maintain on a consolidated basis a ratio of (a) Annualized
EBITDAR to (b) interest expense, plus Rent Expense, plus
current maturities of long-term indebtedness and capital
leases, of greater than (i) 1.17 to 1.0 as of the end of the
fiscal quarter ending September 30, 1998, (ii) 1.20 to 1.0 as
of the end of the fiscal quarter ending December 31, 1998,
(iii) 1.20 to 1.0 as of the end of the fiscal quarter ending
March 31, 1999, and (iv) 1.50 to 1.00 as of the end of the
fiscal quarter ending June 30, 1999.
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23. A new Section 6.21 is hereby added to the Agreement
to read in its entirety as follows:
Section 6.21. Additional Subordinated Debt. Subsequent to
October 1, 1998, and on or before October 15, 1998, the
Borrowers shall obtain not less than $2,000,000 in additional
cash equity capitalization in the form of Subordinated Debt.
The terms and written evidence of such Subordinated Debt must
be acceptable in form and substance to the Bank and, without
limitation of the foregoing, shall provide (a) that interest
at a rate deemed acceptable by the Bank may be paid as
scheduled (but not more frequently than monthly) provided no
Event of Default (and no event which, with the giving of
notice or lapse of time (or both), would be an Event of
Default) shall have occurred and be continuing at the time of
such payment and after giving effect thereto, and (b) that
principal may not be repaid without the prior written consent
of the Bank except that, provided no Event of Default (and no
event which, with the giving of notice or lapse of time (or
both), would be an Event of Default) shall have occurred and
be continuing at the time of such repayment and after giving
effect thereto, the Borrowers may repay the outstanding
principal balance of such Subordinated Debt upon (i) the
outstanding principal balance of the Acquisition Line of
Credit, plus the Line of Credit Portion having been
permanently repaid and/or permanently reduced to an amount not
to exceed Fifteen Million Dollars ($15,000,000) minus the
Outstanding Letter of Credit Obligations, and (ii) the filing
of a Form 10Q or Form 10K with the Securities and Exchange
Commission subsequent to such repayment and/or reduction which
indicates that, on a consolidated basis as of the end of the
applicable fiscal quarter or fiscal year, the Total Funded
Debt/Annualized EBITDA Ratio was less than 3.00 to 1.0.
24. Section 10.7 of the Loan Agreement is hereby amended by
amending the Bank's notice address to read in its entirety as follows:
If to the Bank:
FIRST UNION NATIONAL BANK
Seven Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
25. Simultaneously with the execution hereof, PAC and the
other Borrowers shall execute and deliver to Bank, appropriately completed and
duly executed, the Consolidated Note in the form attached as Exhibit A hereto.
The Consolidated Note is given in replacement of the Consolidated, Amended and
Restated Revolving and Acquisition Line of Credit Promissory Note dated May 12,
1998, and made by the Borrowers to the order of the Bank (the "Prior Note"). The
execution of the Consolidated Note and the replacement of the Prior Note thereby
shall not constitute or act as a novation, satisfaction or extinguishment of the
indebtedness evidenced by the Prior Note, and accrued and unpaid interest under
the Prior Note shall be due and payable with the first payment of interest due
thereunder.
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26. To further induce the Bank to enter into this Amendment
No. 3, the Borrowers hereby represent and warrant to the Bank that (a) the
representations and warranties set forth in Article V of the Loan Agreement and
in each other Loan Document delivered in connection herewith or therewith are
true and correct in all material respects with the same effect as if made on the
date hereof (unless stated to relate solely to an earlier date, in which case
they were true and correct as of such earlier date), and (b) the Borrowers are
in compliance with all the terms and conditions of the Loan Agreement and the
other Loan Documents, and both before and after giving effect to the terms of
this Amendment no Event of Default (and no event which, with the giving of
notice and/or passage of time, would be an Event of Default) has occurred and is
continuing.
27. The Bank hereby waives the non-compliance by the Borrowers
with (a) the covenant contained in Section 6.17 of the Loan Agreement to
maintain on a consolidated basis a Total Funded Debt/Annualized EBITDA Ratio of
less than 3.0 to 1.0 as of June 30, 1998, (b) the covenant contained in Section
6.18 of the Loan Agreement to maintain on a consolidated basis a ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth of less than 3.5 to
1.0 for the period from June 30, 1998 to September 29, 1998, and (c) the
covenant contained in Section 6.19 of the Loan Agreement to maintain on a
consolidated basis a ratio of (i) Annualized EBITDAR to (ii) interest expense,
plus Rent Expense, plus current maturities of long-term indebtedness and capital
leases, of greater than 1.50 to 1.00 as of June 30, 1998; provided, however,
that the foregoing waivers are conditioned upon the (x) actual consolidated
Total Funded Debt/Annualized EBITDA Ratio as of June 30, 1998, being no greater
than 4.0 to 1.0, and (y) the actual ratio of (i) Annualized EBITDAR to (ii)
interest expense, plus Rent Expense, plus current maturities of long-term
indebtedness and capital leases as of June 30, 1998, being no less than 1.30 to
1.00. The Bank further waives noncompliance by the Borrowers with Section 7.8 of
the Loan Agreement with respect to the advance made by PAC in June of 1998 in
the amount of approximately $500,000 in connection with the proposed "Purrfect"
Acquisition, which advance was made without the prior consent of the Bank;
provided, however, that the foregoing waiver is conditioned upon such advance
being structured as a loan repayable over a period of approximately nine months.
The Bank further waives noncompliance by the Borrowers with Section 7.8 of the
Loan Agreement with respect to the non-refundable deposit made by PAC in the
amount of approximately $200,000 in connection with the proposed "Spot-Not"
Acquisition. Notwithstanding the foregoing waivers, the Borrowers acknowledge
and agree that consummation of each of the "Purrfect" Acquisition and the
"Spot-Not" Acquisition will require the Bank's consent in accordance with the
provisions of Section 2.2.2 of the Loan Agreement.
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28. The Borrower agrees to pay all out-of-pocket expenses
incurred by the Bank in connection with the preparation, negotiation, execution
and delivery of this Amendment and all other Loan Documents executed or to be
executed in connection herewith.
29. Except as amended hereby, the Loan Agreement shall remain
unchanged, and the Loan Agreement, as so amended, shall continue in full force
and effect in accordance with its terms.
30. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
31. The recitals hereto and all of the terms of the Loan
Agreement are hereby incorporated into and made a part hereof as though fully
set forth herein.
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IN WITNESS WHEREOF, the parties have caused this Amendment No.
3 to Loan and Security Agreement to be duly executed under seal by their duly
authorized respective officers as of the day and year first above written.
WITNESS/ATTEST: PRECISION AUTO CARE, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
WE JAC CORPORATION
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
LUBE VENTURES, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
ROCKY MOUNTAIN VENTURES, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
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ROCKY MOUNTAIN VENTURES II, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
MIRACLE PARTNERS, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
XXXXXXX CAR WASH, LTD.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
Manager
PREMA PROPERTIES, LTD.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
General Manager
MIRACLE INDUSTRIES, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
-14-
KBG, LLC
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
Manager
PTW, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
NATIONAL 60 MINUTE TUNE, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
HYDRO-SPRAY CAR WASH
EQUIPMENT CO. LTD.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
Authorized Member
PRECISION TUNE AUTO CARE, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
-15-
WORLDWIDE DRYING SYSTEMS, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
PAC MEXICAN DELAWARE HOLDING
COMPANY, INC.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President, Chief Executive Officer
PAC MEXICAN DELAWARE
HOLDING COMPANY, LLC
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President
PRECISION AUTO CARE MEXICO II,
S. de X.X. de C.V.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President and General Manager
-16-
PRECISION AUTO CARE MEXICO I,
S. de X.X. de C.V.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
President and General Manager
INDY VENTURES, L.L.C.
By:
--------------------------- ----------------------------------(SEAL)
Xxxx X. Xxxxxx
Manager
FIRST UNION NATIONAL BANK
By:
--------------------------- ----------------------------------(SEAL)
Name:
---------------------------
Title:
---------------------------
-17-
