FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Agreement"), dated as
of August ___,2001, by and between TRAILER BRIDGE, INC. ("Borrower') and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender").
WITNESSETH:
WHEREAS, Lender and Borrower have entered into certain financing
arrangements pursuant to the Loan and Security Agreement, dated as of December
27, 2000, by and between General Electric Capital Corporation, as Lender, and
Borrower (and as amended hereby, and as the same may have heretofore been or may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"); and
WHEREAS, Borrower has requested that Lender consent to the Unencumbered
Equipment Financing (as defined below), consent to sale/leaseback transaction
proposed for Borrower's Designated Headquarters Facility and that Lender agree
to consider as Eligible Accounts certain accounts which are deemed ineligible
under the Loan Agreement; and
WHEREAS, Borrower has requested that Lender agree to certain amendments
to the Loan Documents in connection therewith; and
WHEREAS, Borrower has requested that Lender waive Borrower's failure to
comply with certain financial covenants under the Loan Agreement and modify and
restate certain financial covenants under the Loan Agreement: and
WHEREAS, Lender is, subject to the terms and conditions contained
herein, willing to agree to such waiver and amendments; and
WHEREAS, by this Agreement, Lender and Borrower desire and intend to
evidence such waiver, amendments and consents.
NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements, warranties and covenants contained herein, the parties hereto agree,
covenant and warrant as follows:
SECTION 1. DEFINITIONS
1.1 Interpretation. All capitalized terms used herein (including the
recitals hereto) shall have the respective meanings assigned thereto in the Loan
Agreement unless otherwise defined herein.
1.2 Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below:
(a) "Designated Equipment" shall mean the 138 International
Tractors and 435 Aluminum Van Trailers more particularly set forth on Schedule A
annexed hereto, together with all replacements and substitutions thereof and
additions thereto.
(b) "Designated Equipment Financing" shall mean the proposed
financing by Borrower of the Designated Equipment.
(c) "Designated Equipment Lender" shall mean the lender providing
Designated Equipment Financing.
(d) "Designated Headquarters Facility" shall mean the Borrower's
headquarters and truck facility and surrounding land in Jacksonville, Florida.
(e) "Eligible Accrued Receivables" shall mean any amounts payable to
Borrower, which are not the subject of a written invoice, in connection with
services performed and deemed fully earned by the Borrower in accordance with
Freight Tariff No. 200 issued by Transportation Services Incorporated, and which
Account is, but for its failure to satisfy the requirements of subsection (e) of
the definition of "Eligible Accounts", otherwise an Eligible Account.
SECTION 2. ACKNOWLEDGMENT
2.1 Acknowledgment of Obligations. Borrower hereby acknowledges,
confirms and agrees that as of the close of business on August 2, 2001, Borrower
is indebted to Lender in respect of the Revolving Credit Loans in the principal
amount of $6,973,567.01, and the Term Loan in the amount of $11,142,857.16. All
such Loans, together with interest accrued and accruing thereon, and fees,
costs, expenses and other charges now or hereafter payable by Borrower to
Lender, are unconditionally owing by Borrower to Lender, without offset, defense
or counterclaim of any kind, nature or description whatsoever.
2.2 Acknowledgment of Security Interests. Borrower and each Credit
party hereby acknowledge, confirm and agree that Lender has and shall continue
to have valid, enforceable and perfected liens upon and security interests in
the Collateral heretofore granted to Lender pursuant to the Loan Documents or
otherwise granted to or held by Lender.
2.3 Binding Effect of Documents. Each Credit party hereby acknow-
ledges, confirms and agrees that: (a) each of the Loan Documents to which it is
a party has been duly executed and delivered to Lender by such Credit Party, and
each is in full force and effect as of the date hereof, (b) the agreements and
obligations of such Credit Party contained in such documents and in this
Agreement constitute the legal, valid and binding Obligations of such Credit
Party, enforceable against it in accordance with their respective terms, and
such Credit Party has no valid defense to the enforcement of such Obligations,
and (c) Lender is and shall be entitled to the rights, remedies and benefits
provided for in the Loan Documents and applicable law.
2
SECTION 3. CONSENT AND WAIVER
3.1 Consent to the Unencumbered Equipment Financing. Notwithstanding
any prohibition contained in the Loan Agreement, and subject to the terms and
conditions contained herein, Lender hereby agrees to consent to the Designated
Equipment Financing, provided that:
(a) Lender receives not less than two (2) business days notice of
the Designated Equipment Financing;
(b) from the initial proceeds of the Designated Equipment
Financing, Lender receives the amount of $575,000; which amount shall be applied
against the unpaid principal balance of the Term Loan in the inverse order of
maturity thereof. In addition, upon the closing of the Designated Equipment
Financing, Borrower shall establish a reserve against Borrowing Availability in
the amount of $425,000 (the "DE Reserve"), which DEF Reserve shall be in
addition to any other reserves established by Lender pursuant to the Loan
Agreement. If Borrower delivers to Lender a compliance certificate evidencing
Borrower's compliance with all financial covenants for the Fiscal Quarter ending
September 30,2001, Lender will release the DEF Reserve to be applied against the
balance of the Revolving Credit Loans; and
(c) the Designated Equipment Lender enters into an agreement
with Lender on terms satisfactory to Lender providing, inter alia, (i) that the
Designated Equipment Lender will provide notice to Lender of any default by
Borrower, and (ii) that following the default by Borrower, the Designated
Equipment Lender will deliver to Lender, to a place mutually acceptable to
Lender and the Designated Equipment Lender, and at Lender's cost and expense,
all Collateral of Lender which is attached to, contained in or in any other way
connected with or located upon, the Designated Equipment.
3.2 Consent to the Sale/Leaseback of Designated Headquarters Facility.
Notwithstanding any prohibition contained in the Loan Agreement, Lender hereby
agrees to consent to the Borrower entering into a sale/leaseback agreement with
respect to the Designated Headquarters Facility so long as, after giving effect
thereto, no Event of Default exists or would exist.
3.3 Waiver. With regard to the failure of Borrower to comply with
certain of the financial covenants set forth in the Loan Agreement as of June
30,2001, Lender hereby waives the noncompliance by the Borrower with the
provisions of said covenants solely for the Borrower's Fiscal Quarter ending
June 30, 2001, provided that. nothing contained herein shall be construed to
limit, impair or otherwise affect Lender's right to declare a default with
respect to any future noncompliance with the above referenced covenant or any
other covenant contained in the Loan Agreement, or any other terms and
provisions of the Loan Agreement or any Loan Documents;
3.4 Reservation of Rights. Other than as expressly stated in this
Agreement, Lender reserves the right, in its discretion, to exercise any or all
of its rights and remedies under the Loan Agreement and the other Loan Documents
as a result of any Events of Default which may be continuing on the date hereof
or any Event of Default which may occur after the date hereof, and Lender has
not waived any of such rights or remedies, and nothing in this Agreement, and no
delay
3
on their part in exercising any such rights or remedies, should be construed as
a waiver of any such rights or remedies.
3.5 No Other Consent; No Waiver. Other than as expressly stated in
this Agreement, Lender has not waived and is not by this Amendment waiving any
Event of Default, which may have occurred prior to the date hereof or may be
continuing on the date hereof, or any Event of Default which may occur after the
date hereof and Lender reserves the right, in its discretion, to exercise any or
all of its rights and remedies arising under the terms of the Loan Documents as
a result of any such other Event of Default which may have occurred prior to the
date hereof or may be continuing on the date hereof, or any Event of Default
which may occur after the date hereof.
SECTION 4. AMENDMENTS.
4.1 Business Consultant.
(a) Borrower covenants and agrees that, on or prior to August
21,2001, Borrower shall enter into an agreement to retain a consultant selected
by Borrower from a list of consultants acceptable to Borrower and Lender.
Borrower shall fully cooperate with the consultant so retained and shall
authorize the consultant to provide such information and reports from time to
time with respect to Borrower and its financial condition, business, assets,
liabilities and prospects, as Lender shall from time to time request. All fees
and expenses of the consultant or shall be solely the responsibility of Borrower
and in no event shall Lender have any liability or responsibility for the
payment of any such fees or expenses, nor shall Lender have any obligation or
liability to Borrower or any other person by reason of any acts or omissions of
the consultant.
(b) Borrower acknowledges, confirms and agrees that the
failure to retain the consultant by August 21, 200 1 shall constitute an Event
of Default.
4.2 Term Loan Amortization. Upon the consummation of the Designated
Equipment Financing, if the amortization schedule with respect to the Designated
Equipment Financing requires quarterly payments, then the Amortization Schedule
set forth in the Term Loan shall remain unchanged. If, however, the amortization
schedule with respect to the Designated Equipment Financing requires monthly
payments, then the Amortization Schedule set forth on Schedule G~ 1 to the Term
Note shall be amended and restated in its entirety as follows: "The Term Loan
shall amortize in equal monthly principal installments of $150,000 payable on
the first day of each month commencing on November 1, 2001, with a Balloon
Payment of the remaining outstanding balance of the Commitment Termination
Date."
4.3 Eligible Accrued Receivables. Borrower has requested that Lender
continue to make Advances on the Eligible Accrued Receivables, which Lender has
consented to do, subject to the following terms and conditions:
(a) Lender will advance 75% of the value of the Eligible Accrued
Receivables.
4
(b) All Advances made on the Eligible Accrued Receivables
shall bear interest at the rate of the Index Rate plus 6%.
(c) The maximum amount which Lender will advance on the
Eligible Accrued Receivables shall be $1,000,000; provided, however. Borrower
hereby acknowledges, confirms and agrees that after January 1,2002, Lender has
the absolute right, in its sole discretion and at any time, to discontinue
making Advances on the Eligible Accrued Receivables. So long as no Event of
Default exists, Lender agrees to provide Borrower with five (5) days notice of
its intent to discontinue making Advances against Eligible Accrued Receivables.
Upon such discontinuance, Borrower shall have no right to request, and Lender
shall have no obligation to make, any Advances against Eligible Accrued
Receivables and the terms and provisions of this Section 4.3 shall be of no
further force and effect.
4.4 Mandatory Prepayment of Term Loan. Borrower hereby acknowledges,
confirms and agrees that Lender has the right to perform, at Lender's discretion
and at Borrower's expense, desktop appraisals of the Collateral. In the event
the principal amount outstanding under the Term Loan exceeds 75% of the net
orderly liquidation value of the Collateral based on any such appraisal (the
"Term Loan Excess"), Borrower shall make an principal prepayment on the Term
Loan equal to the Term Loan Excess in the inverse order of maturity thereof
within thirty (30) days of Lender's notification to Borrower of the existence of
a Term Loan Excess.
4.5 Interest. Notwithstanding anything to the contrary contained in
the Loan Agreement, the Revolving Credit Rate, Term Loan Rate and Capex Loan
Rate shall each be increased by .5% over the then applicable rate; provided,
however, that if Borrower is in compliance with all financial covenants on
December 31, 200 1, the Revolving Credit Rate, Term Loan Rate and Capex Loan
Rate shall each be decreased by .25% over the then applicable rate and if
Borrower is in compliance with all financial covenants on March 31,2002, the
Revolving Credit Rate, Term Loan Rate and Capex Loan Rate shall each be
decreased by .25% over the then applicable rate.
4.6 Financial Covenants.
(i) Section 1 of Schedule G-Financial Covenants shall be amended and
restated in its entirety as follows:
"1. Fixed Charge Coverage Ratio. For each Fiscal Quarter commencing
with the Fiscal Quarter ending September 30,2001, Borrower shall
maintain a Fixed Charge Coverage Ratio (measured on a quarterly basis
for each of the Fiscal Quarters ending September 30,2001, December 31,
2001, March 31,2002 and June 30, 2002; and commencing with the Fiscal
Quarter ending September 30, 2002 and for each Fiscal Quarter there-
after, Fixed Charge Coverage Ratio shall be measured on a rolling twelve
(12) month basis) as of the last day of each such Fiscal Quarter, of not
less than the amount set forth below:
5
Fixed Charge Coverage Ratio
For the Fiscal Quarter ending shall not be less than
----------------------------- ----------------------
September 30, 2001 0.5: 1.00
December 31, 2001 1.0: 1.00
March 31, 2002 1.0: 1.00
June 30, 2002 1.0: 1.00
September 30, 2002 and thereafter 1.1: 1.00"
(ii) The definition of "EBITDA" as defined in Schedule G-Financial
Covenants is hereby amended and restated in its entirety as
follows:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Borrower
for such period, plus interest expense, income tax expense, amortization
expense, depreciation expense, non-cash charges and extraordinary
losses, plus Indebtedness incurred during the period which is
subordinated to Lender pursuant to a written subordination agreement
executed and delivered in favor of Lender, which subordination agreement
shall be in form and substance satisfactory to Lender in its discretion,
plus for the Fiscal Quarter ending September 30, 2001 only, K Corp.
charterhire charges which were incurred during the period, but for which
payment has been deferred for a period of not less than one (1) year
pursuant to a written agreement between Borrower and K Corp, and minus
extraordinary gains and non-cash gains, in each case, of Borrower for
such period determined in accordance with GAAP to the extent included in
the determination of such Net Income (Loss).
(iii) Section 2. Minimum Tangible Net Worth. of Schedule G-Financial
Covenants is hereby amended and restated in its entirety as
follows:
"2. Minimum Tangible Net Worth. Borrower shall have, at the end of
each Fiscal Quarter, a Tangible Net Worth as of the last day of each
Fiscal Quarter of not less than:
Tangible Net Worth
For the Fiscal Quarter ending shall not be less than
----------------------------- ----------------------
September 30,2001 $20,500,000
December 31,2001 $20,800,000
March 31, 2002 $21,100,000
June 30, 2002 $21,400,000
September 30, 2002 $21,900,000
December 31,2002 $22,900,000
March 31,2003 $23,400,000
June 30,2003 $23,900,000
September 30, 2003 and thereafter $24,400,000"
6
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Credit Party hereby represents, warrants and covenants with and to
Lender as follows:
5.1 Representations in Loan Documents. Each of the representations and
warranties made by or on behalf of each Credit Party to Lender in any of the
Loan Documents was true and correct when made and in all material respects is
true and correct on and as of the date of this Agreement with the same full
force and effect as if each of such representations and warranties had been made
by such Credit party on the date hereof and in this Agreement.
5.2 No Event of Default. No Event of Default exists on the date of
this Agreement (after giving effect to the consents and amendments to the Loan
Documents made by this Agreement).
5.3 Binding Effect of Documents. This Agreement and the other Loan
Documents have been duly executed and delivered to Lender by Borrower and are in
full force and effect, as modified hereby and the agreements and obligations of
the Credit Parties contained herein constitute legal, valid and binding obliga-
tions of the Credit Parties enforceable against the Credit Parties in accordance
with their terms.
5.4 Compliance. In addition to the Events of Default defined in the
Loan Documents, failure of any Credit Party to comply with the covenants,
conditions and agreements contained herein shall immediately, without further
notice or demand of any kind, constitute an Event of Default under the Loan
Documents. In addition, Borrower acknowledges, confirms and agrees that the
failure to make any payment, when due, in respect of the MARAD Title XI Debt
shall constitute an Event of Default.
5.5 No Conflict, Etc. The execution, delivery and performance of this
Agreement by each Credit Party will not violate any requirement of law or
contractual obligation of Borrower and will not result in, or require, the
creation or imposition of any Lien on any of Credit Party's properties or
revenues, except in favor of Lender.
SECTION 6. CONDITIONS TO EFFECTIVENESS OF CERTAIN PROVISIONS OF
THIS AGREEMENT
This Agreement shall be effective as of the date first above written,
and such effectiveness shall be subject to the receipt by Lender of each of the
following, in form and substance satisfactory to Lender:
(a) an original of this Agreement, duly authorized, executed and
delivered by Borrower;
(b) payment of the fee set forth in Section 7.2 of this
Agreement;
7
(c) payment of the fees and disbursements of counsel to Lender
incurred in connection with the preparation, negotiation, execution and delivery
of this Agreement and the transactions hereunder; and
(d) any and all such further instruments and documents as
Lender may require to obtain the full benefits of this Agreement and to protect,
preserve and maintain Lender' rights in the Collateral.
SECTION 7. PROVISIONS OF GENERAL APPLICATION
7.1 Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Loan Documents are intended or implied and
in all other respects the Loan Documents are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To
the extent of conflict between the terms of this Agreement and the other Loan
Documents, the terms of this Agreement shall control. The Loan Agreement and
this Agreement shall be read and construed as one agreement.
7.2 Fee. In consideration of the agreements set forth herein, Borrower
shall pay a fee to Lender in the amount of $25,000, which fee shall be fully
earned as of the date hereof and payable contemporaneously with the execution of
this Agreement.
7.3 Costs and Expenses. Borrower absolutely and unconditionally agree
to pay to the Lender, on demand by the Lender at any time and as often as the
occasion therefore may require, whether or not all or any of the transactions
contemplated by this Agreement are consummated: all fees and disbursements of
any counsel to Lender in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements delivered in
connection with the transactions contemplated hereby and expenses which shall at
any time be incurred or sustained by the Lender or any participant of Lender or
any of their respective directors, officers, employees or agents as a
consequence of or in any way in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements prepared,
negotiated, executed or delivered in connection with the transactions
contemplated hereby.
7.4 Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Agreement.
7.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
7.6 Survival of Representations and Warranties. All representations
and warranties made in this Agreement or any other document furnished in
connection with this Agreement shall survive the execution and delivery of this
Agreement and the other documents, and no investigation by Lender or any closing
shall affect the representations and warranties or the right of Lender to rely
upon them.
8
7.7 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7.8 Governing Law. This Agreement shall be governed by , construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws principles thereof.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
IN WITNESS WHEREOF, this Agreement is executed and delivered as of the
day and year first above written.
TRAILER BRIDGE, INC.
By: /s/ Xxxx X. XxXxxx
-------------------------------------
Title: Chairman/CEO
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Duly Authorized Signatory
