EXHIBIT 10.3
AMENDMENT TO LOAN AGREEMENT
AND LETTER OF CREDIT AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT AND LETTER OF CREDIT
AGREEMENT ("AMENDMENT") dated on February 10, 1998 effective as of December 24,
1997 (the "AMENDMENT EFFECTIVE DATE") is made and entered into by and between
XXXXX SYSTEMS, INC., a Texas corporation (the "BORROWER") and CHASE BANK OF
TEXAS, NATIONAL ASSOCIATION ("LENDER"), a national banking association.
RECITALS:
WHEREAS, the Borrower and the Lender are parties to a Loan Agreement dated
as of August 30, 1996, as amended by documents dated as of November 29, 1996 and
August 4, 1997 (the "LOAN AGREEMENT"); and
WHEREAS, the Borrower and the Lender are parties to a Letter of Credit
Agreement dated as of August 30, 1996 (the "LETTER OF CREDIT AGREEMENT"); and
WHEREAS, the Borrower and the Lender have agreed, on the terms and
conditions herein set forth, that the Loan Agreement and the Letter of Credit
Agreement be amended in certain respects;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, IT IS AGREED:
SECTION 1. DEFINITIONS. Terms used herein which are defined in the Loan
Agreement shall have the same meanings when used herein unless otherwise
provided herein.
SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT. On and after the Amendment
Effective Date:
(a) The definition of "BORROWING BASE" set forth in PARAGRAPH 1 of the
Loan Agreement is hereby amended to read in its entirety as follows:
BORROWING BASE means, as at any date, the amount of the Borrowing
Base shown on the Borrowing Base Certificate then most recently delivered
pursuant to PARAGRAPH 6(B) hereof, determined by calculating the amount
equal to the amount by which (A) the sum of (i) 80% of the Eligible
Accounts of Borrower and Borrower's Subsidiaries at said date, PLUS (ii)
the sum of 50% of the Eligible Inventory (exclusive of fuel) of Borrower
and Borrower's Subsidiaries at said date (determined at the lower of cost
or market on a consistent basis), PLUS (iii) 25% of the Inventory of
Borrower and Borrower's Subsidiaries consisting of fuel at said date
(determined at the lower of cost or market on a consistent basis) EXCEEDS
(B) the aggregate outstanding face amount of all Letters of Credit. In the
absence of a current Borrowing Base
Certificate, Lender shall determine the Borrowing Base from time to time
in its reasonable discretion, taking into account all information
reasonably available to it, and the Borrowing Base from time to time so
determined shall be the Borrowing Base for all purposes of this Agreement
until a current Borrowing Base Certificate, in Proper Form, is furnished
to and accepted by Lender.
(b) The definition of "COMMITMENT" set forth in PARAGRAPH 1 of the Loan
Agreement is hereby amended to read in its entirety as follows:
COMMITMENT means the obligation, if any, of Lender to make Loans and
incur Letter of Credit Liabilities in an aggregate principal amount at any
one time outstanding up to (but not exceeding) $8,700,000.
(c) The definition of "GUARANTORS" set forth in PARAGRAPH 1 of the Loan
Agreement is hereby amended to read in its entirety as follows:
GUARANTORS means ChemWay, Way Energy, Diamond and Edco.
(d) The definition of "NON-MATERIAL SUBSIDIARIES" set forth in PARAGRAPH 1
of the Loan Agreement is hereby amended to read in its entirety as follows:
NON-MATERIAL SUBSIDIARIES means Xxxxx Oil of Louisiana, a
corporation and Distributor Informational Systems Corporation, a
corporation.
(e) The definition of "MARGIN PERCENTAGE" set forth in PARAGRAPH 1 of the
Loan Agreement is hereby amended to read in its entirety as follows:
MARGIN PERCENTAGE means (i) on any day prior to January 1, 1998,
1.00% and (ii) on and after January 1, 1998, 2.00%.
(f) A new definition of "BORROWING BASE DEFICIENCY" is hereby added to
PARAGRAPH 1 of the Loan Agreement, such new definition to read in its entirety
as follows:
BORROWING BASE DEFICIENCY means the amount, if any, by which (x) the
sum of the aggregate principal amount of all Loans outstanding plus the
aggregate amount of the Letter of Credit Liabilities exceeds (y) the
Maximum Credit Available Amount
(g) A new definition of "EDCO" is hereby added to PARAGRAPH 1 of the Loan
Agreement, such new definition to read in its entirety as follows:
EDCO means EDCO Environmental, Inc., a Texas corporation.
(h) A new definition of "NON-PRODUCING ASSETS" is hereby added to
PARAGRAPH 1 of the Loan Agreement, such new definition to read in its entirety
as follows:
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NON-PRODUCING ASSETS means the Property described and referred to on
EXHIBIT E hereto.
(i) A new PARAGRAPH 2(C) is hereby added to the Loan Agreement, such new
paragraph to read in its entirety as follows:
(c) On the earlier of April 30, 1998 or the payment in full of the
Facility Debt, Borrower shall pay to Lender, in consideration of the
execution by Lender of that certain Amendment to Loan Agreement and Letter
of Credit Agreement dated as of December 24, 1997, a fee in the amount of
$75,000.00.
(j) PARAGRAPH 3 of the Loan Agreement is hereby amended to read in its
entirety as follows:
3. MANDATORY PREPAYMENTS; PROCEEDS REALIZED FROM NON-PRODUCING
ASSETS.
(a) Borrower shall from time to time on demand by Lender prepay the
Loans (or provide Cover for Letter of Credit Liabilities) in such amounts
as shall be necessary so that at all times the aggregate outstanding
amount of (x) the sum of the aggregate principal amount of all Loans
outstanding plus the aggregate amount of the Letter of Credit Liabilities
shall be less than or equal to (y) the Maximum Credit Available Amount;
PROVIDED, HOWEVER, that so long as no Event of Default has occurred which
is continuing, the payments required under this PARAGRAPH 3(A) shall be
limited to (i) $50,000 on January 31, 1998 and on February 28, 1998 and
(ii) $100,000 on March 31, 1998.
(b) Promptly upon receipt thereof, Borrower will apply (or cause its
applicable Subsidiary to apply) to the Facility Debt a portion of the
proceeds realized from the sale, transfer or other disposition of any of
the Non-Producing Assets (net of the reasonable costs and expenses payable
to unaffiliated third parties in connection with the applicable sale,
transfer or other disposition) in an amount equal to the lesser of (i) the
Borrowing Base Deficiency or (ii) the sum of two (2) times the next
scheduled payment required under PARAGRAPH 3(A) hereof PLUS fifty percent
(50%) of the balance of such proceeds. Payments under this PARAGRAPH 3(B)
shall be applied to the installments due under PARAGRAPH 3(A) hereof in
their order of maturity.
(k) PARAGRAPH 6(B) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(b) Borrower shall furnish or cause to be furnished to Lender three
copies of each of the following: (1) as soon as available and in any event
within 90 days after the end of each fiscal year of each Obligor that is
not an individual, Annual Financial Statements of such Obligor; (2) as
soon as available and in any event within 45 days after the end of each
calendar quarter of each fiscal year of each Obligor that is not an
individual, Quarterly Financial Statements of such Obligor; (3) Monthly
Financial Statements of Borrower, ChemWay, Way Energy, Diamond and Edco,
to be delivered as soon as available and in any event within (x) 45 days
after the end of each calendar month as to Borrower and (y) 30 days after
the end of each
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calendar month as to ChemWay, Way Energy, Diamond and Edco; (4)
concurrently with the financial statements provided for in SUBSECTIONS
(1), (2) and (3) of this PARAGRAPH 6(B), beginning with the Quarterly
Financial Statements as of December 31, 1996, such schedules, computations
and other information, in reasonable detail, as may be required by Lender
to demonstrate compliance with the covenants set forth herein or
reflecting any non-compliance therewith as of the applicable date, all
certified and signed by an appropriate officer or other responsible party
acceptable to Lender on behalf of Borrower and a compliance certificate
("COMPLIANCE CERTIFICATE") in the form of EXHIBIT C hereto, duly executed
by such officer or other responsible party; (5) on or before Tuesday of
each calendar week, a Borrowing Base Certificate as at the last day of the
preceding calendar week, together with such supporting information as
Lender may reasonably request; (6)on or before Tuesday of each calendar
week, (A) a listing and aging of the Accounts of each Obligor which has
executed a Security Agreement covering its Accounts as of the end of the
preceding calendar week, prepared in reasonable detail and containing such
information as Lender may request and (B) a summary of the Inventory of
each Obligor which has executed a Security Agreement covering its
Inventory as of the end of the preceding calendar week, prepared in
reasonable detail and containing such other information as Lender may
request; (7) from time to time, at any time upon the request of Lender,
but at the cost of Borrower, a report of an independent collateral field
examiner (which may be, or be affiliated with, Lender) with respect to the
Accounts and Inventory components included in the Borrowing Base
(PROVIDED, HOWEVER, that so long as no Event of Default has occurred and
is continuing, Lender shall not require such a report more than twice per
calendar year); (8) promptly upon their becoming publicly available, one
copy of each financial statement, report, notice or definitive proxy
statement sent by any Obligor to shareholders generally, and of each
regular or periodic report and any registration statement, prospectus or
written communication (other than transmittal letters) in respect thereof
filed by any Obligor with, or received by any Obligor in connection
therewith from, any securities exchange or the Securities and Exchange
Commission or any successor agency; and (9) such other information
relating to the financial condition, operations, prospects or business of
any Obligor as from time to time may be reasonably requested by Lender.
Each delivery of a financial statement pursuant to this Paragraph shall
constitute a republication of the representations and warranties contained
in PARAGRAPH 5.
(l) PARAGRAPH 6(C)(2) of the Loan Agreement is hereby amended to read in
its entirety as follows:
(2) a Tangible Net Worth for Borrower and its Subsidiaries of
not less than $15,000,000 at all times.
(m) EXHIBITS A and B to the Loan Agreement are hereby amended to be
identical to EXHIBITS A and B attached hereto.
(n) A new EXHIBIT E is hereby added to the Loan Agreement, such new
exhibit to be identical to EXHIBIT C attached hereto.
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SECTION 3. AMENDMENT TO THE LETTER OF CREDIT AGREEMENT. Borrower hereby
acknowledges and agrees that Lender shall have no further obligation to issue
any additional Letters of Credit under the Letter of Credit Agreement after the
Amendment Effective Date.
SECTION 4. WAIVER OF CERTAIN DEFAULTS. Lender hereby waives the defaults
under SECTION 6(C) of the Loan Agreement existing as of June 30, 1997 and
September 30, 1997. This waiver shall not extend to any other defaults existing
as of June 30, 1997 or as of September 30, 1997 or to any defaults existing
after September 30, 1997.
SECTION 5. LIMITATIONS. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Loan Agreement or any of
the other Credit Documents, or (b) except as expressly set forth herein,
prejudice any right or rights which the Lender may now have or may have in the
future under or in connection with the Loan Agreement, the Credit Documents or
any of the other documents referred to therein. Except as expressly modified
hereby or by express written amendments thereof, the terms and provisions of the
Loan Agreement, the Notes, and any other Credit Documents or any other documents
or instruments executed in connection with any of the foregoing are and shall
remain in full force and effect. In the event of a conflict between this
Amendment and any of the foregoing documents, the terms of this Amendment shall
be controlling. The representations and warranties made in each Credit Document
are true and correct in all material respects on and as of the Amendment
Effective Date.
SECTION 6. PAYMENT OF EXPENSES. The Borrower agrees, whether or not the
transactions hereby contemplated shall be consummated, to reimburse and save the
Lender harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this Amendment,
including, without limitation, the reasonable fees and expenses of any local or
other counsel for the Lender, and all stamp taxes (including interest and
penalties, if any), recording taxes and fees, filing taxes and fees, and other
charges which may be payable in respect of, or in respect of any modification
of, the Loan Agreement and the other Credit Documents. The provisions of this
Section shall survive the termination of the Loan Agreement and the repayment of
the Loans.
SECTION 7. GOVERNING LAW. This Amendment and the rights and obligations of
the parties hereunder and under the Loan Agreement shall be construed in
accordance with and be governed by the laws of the State of Texas and the United
States of America.
SECTION 8. DESCRIPTIVE HEADINGS, ETC. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
SECTION 9. ENTIRE AGREEMENT. This Amendment and the documents referred to
herein represent the entire understanding of the parties hereto regarding the
subject matter hereof and supersede all prior and contemporaneous oral and
written agreements of the parties hereto with respect to the subject matter
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hereof, including, without limitation, any commitment letters regarding the
transactions contemplated by this Amendment.
SECTION 10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts and all of such
counterparts shall together constitute one and the same instrument.
SECTION 11. AMENDED DEFINITIONS. As used in the Loan Agreement (including
all Exhibits thereto) and all other instruments and documents executed in
connection therewith, on and subsequent to the Amendment Effective Date the term
(i) "Agreement" shall mean the Loan Agreement as amended by this Amendment, and
(ii) references to any and all other Credit Documents shall mean such documents
as amended as contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized offices as of
the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER CREDIT DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND 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.
Exhibit A - Request for Credit
Exhibit B - Borrowing Base Certificate
XXXXX SYSTEMS, INC.,
a Texas corporation
By: /s/ X.X. XXXXX, XX.
Name: X.X. XXXXX, XX.
Title: PRESIDENT
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CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, a national banking
association
By: /s/ XXXXX X. XXXXX
Name: XXXXX X. XXXXX
Title: VICE PRESIDENT
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The undersigned hereby join in the execution of this Amendment to evidence
their consent hereto and its acknowledgment that the Credit Documents executed
by the undersigned shall continue to apply to the Loan Agreement, as amended
hereby.
CHEM-WAY SYSTEMS, INC.,
a Texas corporation
By: /s/ X. X. XXXXX, XX.
Name: X. X. XXXXX, XX.
Title: VICE PRESIDENT
WAY ENERGY SYSTEMS, INC.,
a Delaware corporation
By: /s/ X. X. XXXXX, XX.
Name: X. X. XXXXX, XX.
Title: PRESIDENT
DIAMOND MINI MART, INC.,
a Texas corporation
By: /s/ X. X. XXXXX, XX.
Name X. X. XXXXX, XX.
Title: PRESIDENT
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REQUEST FOR CREDIT
______________, 199___
Chase Bank of Texas, National Association
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Manager, Franchise and Trademark
Finance Division
Gentlemen:
The undersigned hereby certifies that [he] [she] is the
_________________________________ of XXXXX SYSTEMS, INC., a Texas corporation
("BORROWER"), and that as such is authorized to execute this Request for Credit
(the "REQUEST") on behalf of Borrower pursuant to the Loan Agreement (as it may
be amended, supplemented or restated from time to time, the "LOAN AGREEMENT")
dated as of August 30, 1996, by and between Borrower and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION. The Loan being requested hereby is to be in the amount set
forth in (b) below and is requested to be made or issued, as the case may be on
__________, 199___, which is a Business Day. On behalf of Borrower, the
undersigned further certifies, represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the Loan
Agreement unless otherwise specified herein):
a. As of the date hereof:
(1) The current Borrowing Base is: $__________
(2) Aggregate outstanding amount
of Loans is: $__________
(3) Aggregate face amount of all outstanding
Letters of Credit $__________
(4) The available Commitment [the amount by which
the lesser of (x) the amount in (a)(1) above
or (y) $8,700,000 EXCEEDS the sum of the
amounts in (a)(2) and (a)(3) above],
if positive, is: $__________
EXHIBIT A
b. If and only if the available Commitment is positive, Borrower hereby
requests under this Request a Loan in the amount of $____________
(which is no more than the available Commitment).
c. The representations and warranties made in each Credit Document are
true and correct in all respects on and as of the time of delivery
hereof, with the same force and effect as if made on and as of the
time of delivery hereof.
d. No Default has occurred and is continuing or will occur as a result
of the requested Loan or Letter of Credit, as the case may be.
e. The requested Loan is to be used for the benefit of (check one) ____
Borrower ____ ChemWay _____ Way Energy. After giving effect to the
requested Loan, (i) the aggregate unpaid principal amount of all
Loans will not exceed $8,700,000, (ii) the aggregate unpaid
principal amount of all Loans used for the benefit of Borrower will
not exceed $2,200,000, (iii) the aggregate unpaid principal amount
of all Loans used for the benefit of ChemWay will not exceed
$6,000,000 and (iv) the aggregate unpaid principal amount of all
Loans used for the benefit of Way Energy will not exceed $500,000.
Thank you for your attention to this matter.
Very truly yours,
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING REQUEST]
EXHIBIT A
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that [he] [she] is the
____________________________ of XXXXX SYSTEMS, INC., a Texas corporation
("BORROWER"), and that as such is authorized to execute this Borrowing Base
Certificate on behalf of Borrower pursuant to the Loan Agreement (as it may be
amended, supplemented or restated from time to time, the "LOAN AGREEMENT") dated
August 30, 1996 by and between Borrower and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION. On behalf of Borrower, the undersigned further certifies,
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Loan Agreement unless otherwise specified
herein):
(1) As of ____________, 199___, the components of the Borrowing Base are
as follows:
(a) Eligible Accounts of Borrower: $____________
(b) Eligible Accounts of ChemWay: $____________
(c) Eligible Accounts of Way Energy: $____________
(d) Eligible Accounts of Diamond: $____________
(e) Eligible Accounts of Edco: $____________
(f) Eligible Inventory (other than fuel) of Borrower: $____________
(g) Eligible Inventory (other than fuel) of ChemWay: $____________
(h) Eligible Inventory (other than fuel) of Way Energy: $____________
(i) Eligible Inventory (other than fuel) of Diamond: $____________
(j) Eligible Inventory (other than fuel) of Edco: $____________
(k) Eligible Inventory of Borrower consisting of fuel: $____________
(l) Eligible Inventory of ChemWay consisting of fuel: $____________
(m) Eligible Inventory of Way Energy consisting of fuel: $____________
(n) Eligible Inventory of Diamond consisting of fuel: $____________
(o) Eligible Inventory of Edco consisting of fuel: $____________
EXHIBIT B
(2) The Borrowing Base determined on the basis of the above information
is equal to the sum of 80% of LINES (A), (B), (C), (D) and (E) above
plus 50% of LINES (F). (G), (H), (I) and (J) above plus 25% of LINES
(K), (L), (M), (N) and (O) above; or $___________.
(3) The Eligible Accounts and the Eligible Inventory of Borrower and
Borrower's Subsidiaries are calculated in accordance with the Loan
Agreement and the schedule(s), if any, attached hereto.
(4) The current aggregate outstanding amount of Loans is $______________
and the aggregate face amount of all outstanding Letters of Credit
is $_______________ (the sum of the foregoing is $______________).
Dated ____________, 199___.
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING
CERTIFICATE]
EXHIBIT B
LISTING OF NON-PRODUCING ASSETS SET FORTH
ON THE FOLLOWING PAGES
Kincers #6 Sweeny Texaco
0000 Xxxxxxx Xxx. 000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Sweeny, Texas
Bulk Plant Auto Zone
000 Xxxx Xxxx 0000 0xx Xx.
Xxxx, Xxxxx Xxx Xxxx, Xxxxx
B.P. Approx. 15 acres Magobar Warehouse
Excess Property
Xxx. 00 & 00 Xxxxxxx Xxxxxxxx
Xx Xxxxx, Xxxxx
Matagorda-River Property
Bulk Plant
0000 Xxxxxxxx Xxxx Xxxx Xxxxx
Xxx Xxxx, Xxxxx
Station
0000 Xxxxxx X
Xxx Xxxx, Xxxxx
Closed Station
0000 0xx & Xxx. X
Xxx Xxxx, Xxxxx
Vacant Site
0000 XX Xxxxx
Xxxxxxxx, Xxxxx
Vacant Site
Xxx. 00 Xxxxx @ Xxxx
Xx Xxxxx, Xxxxx
Vacant Site
Hwy. 332 & Loganberry
Lake Jackson, Texas
EXHIBIT C
