SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made and entered into on March 7, 2000, by and
among CONGRESS FINANCIAL CORPORATION (SOUTHWEST), a Texas
corporation ("Lender") and L&S AUTOMOTIVE PRODUCTS CO. ("LSAP"),
a Delaware corporation, INTERNATIONAL BEARINGS, INC. ("IBI"), an
Oklahoma corporation, L&S BEARING CO. ("L&SB"), an Oklahoma
corporation, LSB EXTRUSION CO. ("LSBE"), an Oklahoma corporation,
ROTEX CORPORATION ("Rotex"), an Oklahoma corporation, and
TRIBONETICS CORPORATION ("Tribonetics"), an Oklahoma corporation
(LSAP, IBI, L&SB, LSBE, Rotex and Tribonetics are individually,
collectively and jointly and severally herein referred to as
"Borrower" or the "Borrowers").
PRELIMINARY STATEMENTS
A. Lender and Borrower have entered into that certain Loan
and Security Agreement, dated May 7, 1999, as amended by a First
Amendment to Loan and Security Agreement dated as of November 15,
1999 (as amended, the "Loan Agreement"), pursuant to which Lender
has extended a line of credit and term loan to Borrower.
B. Borrower is acquiring the assets of Xxxxxx Corporation
pursuant to an Asset Purchase and Sale Agreement dated March 2000
(the "Xxxxxx Asset Purchase Agreement") by and between the Xxxxxx
Corporation and LSAP, Borrower and Lender have agreed to amend
the Loan Agreement 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
2.01 Amendment to Section 1.46. Section 1.46 of the Loan
Agreement, the definition of "Term Loan," is hereby deleted in
its entirety and the following substituted in lieu thereof:
"`Term A Note' shall have the meaning set forth in
Section 2.3(a)(i) hereof."
2.02 Amendment to Section 1.47. Section 1.47 of the Loan
Agreement, the definition of "Term Promissory Note," is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"`Term B Note" shall have the meaning set forth in
Section 2.3(a)(ii) hereof."
2.03 Amendment to Section 1.48. Section 1.48 of the Loan
Agreement, the definition of "Value," is hereby deleted in its
entirety and the following substituted in lieu thereof:
"`Term Loan' shall mean Term Loan A and Term Loan B
made by Lender to Borrowers as provided in Section 2.3(a)
hereof."
2.04 Addition of Section 1.49. Effective as of the date
hereof, the Loan Agreement is hereby amended by adding a new
Section 1.49 thereto, which shall read as follows:
"`Value' shall mean, as determined by Lender in good
faith, with respect to Inventory, the lower of (a) cost
computed on a first-in-first-out basis in accordance with
GAAP or (b) market value."
2.05 Amendment to Section 2.3(a). Section 2.3(a) of the
Loan Agreement, "Term Loan," is hereby deleted in its entirety
and the following substituted in lieu thereof:
"2.3 Term Loans.
(a) (i) Term Loan A. Lender is making a term loan to
Borrowers in the original principal amount of $2,112,500.01
(the "Term A Loan"). Term Loan A is: (1) evidenced by a
promissory note, substantially in the form of Exhibit C-A
attached hereto, in such original principal amount (the
"Term A Note") duly executed and delivered by Borrowers to
Lender pursuant to the Second Amendment to Loan Agreement
dated as of March 7, 2000; (2) to be repaid, together with
interest and other amounts, in accordance with this
Agreement, the Term A Note, and the other Financing
Agreements and secured by all of the Collateral; provided,
however, no amount of Term A Loan shall be made available to
IBI.
(ii) Term Loan B. Lender is making a term loan
to Borrowers in the original principal amount of $2,000,000
(the "Term B Loan"). Term Loan B is: (1) evidenced by a
promissory note, substantially in the form of Exhibit C-B
attached hereto, in such original principal amount (the
"Term B Note") duly executed and delivered by Borrowers to
Lender pursuant to the Second Amendment to Loan Agreement
dated as of March 7, 2000; (2) to be repaid, together with
interest and other amounts, in accordance with this
Agreement, the Term B Note, and the other Financing
Agreements and secured by all of the Collateral; provided,
however, no amount of Term B Loan shall be made available to
IBI."
2.06 Amendment to Section 6.6. Section 6.6 of the Loan
Agreement, the definition of "Use of Proceeds," is hereby amended
by adding the following at the end of such Section:
"Anything to the contrary herein notwithstanding, the
proceeds of Term Loan B shall be used by Borrower primarily
for the acquisition by Borrower of the assets of the Xxxxxx
Corporation."
2.07 Replacement of Exhibit C. Exhibit C of the Loan
Agreement, is hereby deleted in its entirety and replaced with
Exhibits C-A and C-B as attached hereto.
2.08. Amendment of Schedules. Effective as of the date
hereof, the Information Certificate and each of the Schedules to
the Loan Agreement are hereby amended and restated in their
entirety to read as set forth on the corresponding Schedules
attached hereto as Attachment 1.
2.09. Limited Consent. Subject to the terms and conditions
set forth herein, and in reliance on the representations and
warranties of Borrower made herein, Lender hereby consents to the
acquisition by Borrower of the assets of the Xxxxxx Corporation
on the terms and conditions set forth in the Xxxxxx Asset
Purchase Agreement approved by Lender in its sole discretion (the
"Acquisition").
ARTICLE III
Conditions Precedent
3.01 Conditions to Effectiveness. The effectiveness of this
Amendment is subject to the satisfaction of the following
conditions precedent, unless specifically waived in writing by
Lender:
(a) Lender shall have received the following documents, in
form and substance satisfactory to Lender and its legal
counsel, duly executed by the parties thereto (as
applicable):
(i) this Amendment;
(ii) the Term A Note;
(iii) the Term B Note;
(iv) resolutions of Borrower's Board of Directors which
authorize the execution, delivery and performance
by Borrower of this Amendment;
(v) a closing certificate signed by the senior officer
of each Borrower, dated as of the date of this
Amendment, stating that (A) the representations
and warranties set forth in the Loan Agreement and
in this Amendment are true and correct as of such
date, (B) Borrower is on such date in compliance
with all the terms and provisions set forth in the
Loan Agreement, as amended by this Amendment, and
(C) on such date no Event of Default or event or
condition which, with notice or passage of time or
both, would constitute an Event of Default, has
occurred or is continuing;
(vi) other documents as Lender may request to permit,
protect and perfect its valid perfected security
interests in and liens upon the Collateral;
(vi) all consents, waivers, acknowledgments and other
agreements from third persons which Lender may
deem necessary or desirable in order to permit,
protect and perfect its security interests in and
liens upon the Collateral or to effectuate the
provisions or purposes of the Financing
Agreements;
(viii) such additional documents, instruments and
information as Lender or its legal counsel may
request.
(b) The representations and warranties contained herein, in
the Loan Agreement and in the other Financing
Agreements, shall be true and correct as of the date
hereof, as if made on the date hereof.
(c) No Event of Default or event or condition which, with
notice or passage of time or both, would constitute an
Event of Default, shall have occurred and be
continuing, unless such event, condition or Event of
Default has been specifically waived in writing by
Lender.
(d) Lender shall have received from Borrower a closing fee
for this Amendment in the amount of $20,000, which fee
shall be deemed fully earned and non-refundable upon
receipt thereof.
(e) The Acquisition shall have been completed by Borrower.
(f) 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 IV
No Waiver
Nothing contained in this Amendment shall be construed as a
waiver by Lender of any covenant or provision of the Loan
Agreement or the other Financing Agreements or of any other
contract or instrument among Borrower and/or Guarantor and
Lender, and the failure of Lender at any time or times hereafter
to require strict performance by Borrower or Guarantor 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 Financing Agreements and any other contract
or instrument among Borrower and/or Guarantor and Lender.
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
Financing Agreements, and, except as expressly modified and
superseded by this Amendment, the terms and provisions of the
Loan Agreement and the other Financing Agreements are ratified
and confirmed and shall continue in full force and effect.
Borrower and Lender agree that (a) the Loan Agreement, as amended
hereby, and the other Financing Agreements shall continue to be
legal, valid, binding and enforceable in accordance with their
respective terms, and (b) the security interests in the
Collateral are in full force and effect.
5.02 Representations and Warranties of Borrower. Borrower
hereby represents and warrants to Lender that (a) the execution,
delivery and performance of this Amendment and any and all other
Financing Agreements executed and/or delivered in connection
herewith have been authorized by all requisite corporate action
on the part of Borrower and will not violate the Certificate of
Incorporation or Bylaws of Borrower; (b) the representations and
warranties contained in the Loan Agreement, as amended hereby,
and any other Financing 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; (c) no Event of
Default or event or condition which, with notice or passage of
time or both, would constitute an Event of Default under the Loan
Agreement, as amended hereby, has occurred and is continuing; (d)
Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement and the other Financing
Agreements, as amended hereby; and (e) Borrower has not amended,
modified or in any way altered its Certificate of Incorporation
or Bylaws since May 7, 1999.
ARTICLE VI
Miscellaneous Provisions
6.01 Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any
other Financing Agreement, including, without limitation, any
document furnished in connection with this Amendment, shall
survive the execution and delivery of this Amendment and the
other Financing 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 Financing 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 Financing Agreements to the Loan Agreement shall mean a
reference to the Loan Agreement and the other Financing
Agreements as amended hereby.
6.03 Expenses of Lender. As provided in Section 9.16 of the
Loan Agreement, Borrower, jointly and severally, agree to pay on
demand all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of
this Amendment and the other Financing Agreements executed
pursuant hereto, and any and all amendments, modifications, and
supplements thereto, including, without limitation, all costs and
expenses of filing or recording and the reasonable costs and fees
of Lender's outside legal counsel (including legal assistants).
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 Borrower and their
respective successors and assigns, except that Borrower may not
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 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.
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 INTERNAL LAWS OF THE STATE OF
TEXAS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
6.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER
FINANCING 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 FINANCING AGREEMENTS, AS AMENDED, 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
BORROWER AND LENDER.
6.11 Release. BORROWER HEREBY ACKNOWLEDGES THAT IT
PRESENTLY 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. BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER,
ITS PREDECESSORS, OFFICERS, DIRECTORS, 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 BORROWER
MAY NOW HAVE OR HAVE HAD AGAINST LENDER, ITS PREDECESSORS,
OFFICERS, DIRECTORS, 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 FINANCING AGREEMENTS, AND NEGOTIATION FOR
AND EXECUTION OF THIS AMENDMENT.
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IN WITNESS WHEREOF, this Amendment has been executed and is
effective as of the date first above-written.
LENDER BORROWERS
CONGRESS FINANCIAL CORPORATION L&S AUTOMOTIVE PRODUCTS CO.
(SOUTHWEST)
By:
By: Name:
Xxxx X. Xxxxxxx, Xx., Vice Title:
President
Vice President Chief Executive
Office:
Address:
6 South Pennsylvania
0000 Xxxx Xxxxxx, Xxx. 0000 Xxxxxxxx Xxxx, Xxxxxxxx
Xxxxxx, XX 00000 73107
L&S BEARING CO.
By:
Name:
Title:
Chief Executive Office:
0 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx
00000
LSB EXTRUSION CO.
By:
Name:
Title:
Chief Executive Office:
0 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx
00000
ROTEX CORPORATION
By:
Name:
Title:
Chief Executive Office:
0 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx
00000
TRIBONETICS CORPORATION
By:
Name:
Title:
Chief Executive Office:
0 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx
00000
INTERNATIONAL BEARINGS, INC.
By:
Name:
Title:
Chief Executive Office:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Consent and Reaffirmation
Dated as of March 7, 2000
LSA Technologies Inc. ("Guarantor") hereby: (a)
acknowledges the execution of, and consents to, the terms and
conditions of that certain Second Amendment to Loan and Security
Agreement, of even date herewith (the "Second Amendment"), by and
among Congress Financial Corporation (Southwest) ("Lender") and
L&S Automotive Products Co., Inc., International Bearings, Inc.,
Rotex Corporation, L&S Bearing Co., ISB Extrusion Co. and
Tribonetics Corporation; (b) reaffirms and confirms its
obligations under that certain Guarantee of LSA Technologies,
Inc. (the "Guaranty"), dated as of May 7, 1999, made by Guarantor
in favor of Lender; (c) acknowledges that it has no defense,
counterclaim, set-off or any other claim to diminish its
liability under the Guaranty; and (d) acknowledges that its
consent is not required to the effectiveness of the Second
Amendment or any future amendment, modification, forbearance or
other action with respect to the Loans, the Collateral, or any of
the other Financing Agreements.
.
GUARANTOR:
LSA TECHNOLOGIES INC.
By:
Name:
Title:
Chief Executive Office:
0 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
