AMENDMENT NO. 6
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, (ii) amending the Leverage Ratio covenant, and (iii) amending the
Debt Service Coverage 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:
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
$5,800,000.00 09/30/00
$5,000,000.00 12/31/00
$4,600,000.00 03/31/01
$4,800,000.00 06/30/01
$5,600,000.00 09/30/01
$6,550,000.00 12/31/01 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 sales were
approved in advance by Secured Party in writing); provided,
however, that the aggregate amount of such losses added to
stockholders' equity in arriving at Debtor's Tangible Net Worth
shall in no event exceed $2,500,000.00, all 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 with this covenant 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
8.29 to 1 09/30/00
9.1 to 1 12/31/00
9.5 to 1 03/31/01
8.5 to 1 06/30/01
6.75 to 1 09/30/01
5.25 to 1 12/31/01and 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."
c. Item 30(c) of the Schedule to the Loan Agreement is hereby
deleted and the following is inserted in place thereof:
"(c) Debt Service Coverage Ratio: Debtor shall maintain a Debt
Service Coverage Ratio (as defined below) of not less than the
following ratios for the applicable time periods, determined in
accordance with generally accepted accounting principles
consistently applied:
Ratio Time Period
.65 to 1 1/1/00 through 12/31/00
.9 to 1 1/1/01 and thereafter
"Debt Service Coverage Ratio means the ratio of (a) net income, plus
depreciation, plus deferred income taxes, plus increases in
operating liabilities, plus interest expense, plus proceeds from
equipment disposal, plus proceeds of other financings, less pay-
downs from equipment trades, less unfinanced capital expenditures,
less increases in operating assets, to (b) principal and interest
payments on indebtedness for borrowed money and capitalized leases.
The foregoing Debt Service Coverage Ratio will be tested for
compliance with this covenant annually at the end of each calendar
year."
3. Contemporaneously with the execution of this Amendment by Debtor,
Debtor shall pay to Secured Party a loan modification fee of $2,500.00.
4. 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. Except as disclosed in writing
to Secured Party on the date hereof, 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.
5. 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. 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.
6. Capitalized terms used in this Amendment shall have the same
meanings as specified in the Loan Agreement, except as otherwise expressly
provided herein.
7. 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.
8. 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. 6 to Loan and Security Agreement
and Other Transaction Documents (the "Amendment") has been executed by the
parties as of the 16th day of November, 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/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Senior Vice President
