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Exhibit 10.4
AMENDMENT ONE TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT ONE TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of February 23, 2000, is made and entered into by and between BANK ONE,
TEXAS, NATIONAL ASSOCIATION ("LENDER") and LONG REACH HOLDINGS, INC., a Delaware
corporation ("BORROWER").
RECITALS
A. Borrower and Lender entered into that certain Loan and Security
Agreement, dated April 20, 1999 (the "LOAN AGREEMENT").
B. Borrower is the surviving corporation of a merger of Long Reach
Holding, Inc., a Delaware corporation, into TBM Acquisition I, Inc., a Delaware
corporation (the "MERGER") pursuant to the Amended and Restated Agreement and
Plan of Merger dated as of February 4, 2000 by and among TBM Holdings, Inc., TBM
Acquisition I, Inc., Long Reach Holdings, Inc. and the shareholders of Long
Reach Holdings, Inc. (the "MERGER AGREEMENT").
C. Lender and Borrower desire to amend the Loan Agreement as herein 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 by both parties, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same definitions
assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Amendments to the Loan Agreement
Section 2.01. Amendment of Definitions. SECTION 1 of the Loan Agreement
is hereby amended by deleting the definitions of "Borrowing Base," "Committed
Sum," "Contract Rate," "Eligible Inventory," "Fixed Charge Coverage Ratio,"
"Tangible Net Worth" and "Termination Date" in their entirety and substituting
therefor the following:
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"'Borrowing Base' means, as of any date, an amount equal to
the sum of: (a) eighty-five percent (85%) (or such lesser percentage as
the Lender may in its sole and absolute discretion determine from time
to time) of Eligible Accounts on such date, PLUS (b) the lesser of (i)
the sum of (A) sixty percent (60%) (or such lesser percentage as the
Lender may in its sole and absolute discretion determine from time to
time) of the value of Eligible Inventory consisting of raw material
metal stock (based upon the lower of cost (computed on a
first-in-first-out basis), fair market value or orderly liquidation as
determined by Lender in its sole discretion), PLUS (B) fifty percent
(50%) (or such lesser percentage as the Lender may in its sole and
absolute discretion determine from time to time) of the value of
Eligible Inventory other than metal stock (based upon the lower of cost
(computed on a first-in-first-out basis), fair market value or orderly
liquidation as determined by Lender in its sole discretion) or (ii) the
lesser of (A) $4,000,000, or (B) one hundred twenty-five percent (125%)
of the aggregate advances against Eligible Accounts from the date of
Amendment One hereto through December 31, 2000 (and one hundred percent
(100%) after December 31, 2000), MINUS (c) the Financial Accommodation
Reserve, and MINUS (d) the Reserve."
"'Committed Sum' means $10,000,000."
"'Contract Rate' shall mean the sum of the Prime Rate in
effect from time to time, plus one percent percent (1.0%); PROVIDED,
HOWEVER, the Contract Rate shall be reduced to the sum of the Prime
Rate in effect from time to time, plus one half of one percent (0.50%)
in the event that (i) the Borrower's audited financial statements for
the ten month fiscal year ending December 31, 2000 establish that
Borrower's Net Cash Flow Available for Principal Payments for such
fiscal year is no worse than a negative $714,000, (ii) no Default or
Event of Default has occurred and is continuing at the time Borrower's
audited financial statements for the fiscal year ending December 31,
2000 are delivered to Lender, and (iii) Borrower has maintained
$650,000 or more in Average Excess Loan Availability under the
Revolving Facility for the twelve (12) consecutive months ending
December 31, 2000; any such reduction in the Contract Rate resulting
from achieving such parameters shall become effective on the first day
of the calendar month after the Borrower's audited financial statements
for the ten month fiscal year ending December 31, 2000 are delivered to
Lender. If Borrower qualified for a rate reduction pursuant to the
immediately preceding sentence, the Contract Rate shall be further
reduced by one quarter of one percent (0.25%) (or in the event that
Borrower did not qualify for a rate reduction pursuant to the
immediately preceding sentence, the Contract Rate shall be reduced by
one half of one percent (0.5%)) in the event that (i) the Borrower's
audited financial statements for the calendar year ending December 31,
2001 establish that Borrower's Net Cash Flow Available for Principal
Payments for such calendar year equals or exceeds $1,021,000, (ii) no
Default or Event of Default has occurred and is continuing at the time
Borrower's audited financial statements for the calendar year ending
December 31, 2001 are delivered to Lender, and (iii) Borrower has
maintained
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$650,000 or more in Average Excess Loan Availability under the
Revolving Facility for the twelve (12) consecutive months ending
December 31, 2001; any such reduction in the Contract Rate resulting
from achieving such parameters shall become effective on the first day
of the calendar month after the Borrower's audited financial statements
for the calendar year ending December 31, 2001 are delivered to Lender.
Any change in the Contract Rate resulting from a change in the Prime
Rate shall become effective on the day such change in the Prime Rate is
announced by Lender."
"'Eligible Inventory' means, as at any date of determination,
all inventory owned by and in the possession of Borrower and located in
the United States of America that Lender, in its sole and absolute
discretion, deems to be eligible for borrowing purposes; provided,
however, that upon the effectiveness of Amendment One to this
Agreement, a reserve of $100,000 shall be established (the "INITIAL
INVENTORY RESERVE") that shall reduce the amount of Eligible Inventory
otherwise determined hereunder, and as of each calendar month end
occurring after the effectiveness of such Amendment One, such
eligibility reserve shall be increased by $100,000; provided, further,
that when Borrower delivers to Lender an inventory line item turn
report, in form and detail satisfactory to Lender in its sole
discretion, that establishes to Lender's satisfaction the proper amount
of a reserve (the "TURN REPORT RESERVE") against Eligible Inventory
equal to purchased parts raw materials and finished goods on hand in
excess of one year's supply, as demonstrated by historical sales, such
Turn Report Reserve shall be used in place of the Initial Inventory
Reserve (as it may have been increased) as long as such inventory line
item turn report is delivered to Lender within fifteen days of each
fiscal quarter end; otherwise, the Initial Inventory Reserve shall be
reinstated at the amount last used and shall continue to increase each
month end by $100,000. Without limiting the generality of the
foregoing, unless otherwise agreed by Lender, the following is not
Eligible Inventory:
(a) work-in-process;
(b) finished goods subject to a specific purchase order which
do not meet the specifications of such purchase order;
(c) inventory which Lender determines, in its sole and
absolute discretion exercised in good faith, to be
unacceptable for borrowing purposes due to age, quality, type,
category, value and/or quantity;
(d) inventory with respect to which Lender does not have a
valid, first priority and fully perfected security interest;
(e) inventory with respect to which there exists any Lien
(other than a Permitted Lien) in favor of any Person other
than Lender;
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(f) packaging or shipping material or maintenance supplies;
(g) shipping or product labels;
(h) inventory that is obsolete;
(i) inventory that has been returned or repossessed unless
such inventory is in new, unused and saleable condition;
(j) inventory that consists of used goods taken in trade;
(k) inventory produced in violation of the Fair Labor
Standards Act, in particular provisions contained in Title 29
U.S.C. 215 (a)(i);
(l) inventory located in a jurisdiction other than the United
States of America and inventory located at a location for
which Lender does not have a valid landlord's or
warehouseman's waiver or subordination on terms and conditions
acceptable to Lender in its sole discretion; and
(m) inventory located at any location other than those listed
on SCHEDULE 5.1(q), as amended from time to time."
"'Fixed Charge Coverage Ratio' means, for any period, the
ratio of (i) consolidated Net Income of Borrower and its Subsidiaries
after income taxes, PLUS, without duplication and to the extent
deducted in determining Net Income, depreciation and amortization and
other non-cash expenses for such period, interest expense paid in cash
during such period, lease expense for such period, Allowed Kaizen
Expenses for such period, Allowed Restructuring Expenses for such
period to (ii) the sum of the following, without duplication, interest
expense paid in cash during such period, plus lease expense for such
period, plus current maturities of Funded Indebtedness, plus current
maturities of Capitalized Lease Obligations, plus Non-Financed Capital
Expenditures, plus dividends on preferred stock paid in cash, plus
principal payments on Subordinated Indebtedness if such payments are
permitted by the Subordination Agreement."
"'Tangible Net Worth' means, as applied to Borrower, the
consolidated Net Worth of Borrower and its Subsidiaries at the time in
question, after deducting therefrom amounts due from Affiliates and
shareholders of such Person and all other items which should properly
be treated as intangibles in accordance with GAAP, plus Subordinated
Indebtedness then outstanding."
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"'Termination Date' means March 31, 2003."
Section 2.02. Amendment of Section 1. SECTION 1 is further amended by
adding thereto the following definitions:
"'Allowed Kaizen Expenses' means costs and expenses incurred
by Borrower to provide Kaizen consulting and training; provided, that,
such costs and expenses shall not exceed an aggregate $360,000 for
calendar year 2001, $300,000 for calendar year 2002 and $60,000 for the
period from January 1, 2003 through the Termination Date."
"'Allowed Restructuring Expenses' means costs and expenses
incurred by Borrower related to the merger of Long Reach Holdings, Inc.
into TBM Acquisition I, Inc. during calendar year 2000; provided, that,
such costs and expenses shall not exceed an aggregate $1,250,000 for
calendar year 2000 and an aggregate $500,000 for calendar year 2001 and
no amount in subsequent years."
"'Average Excess Loan Availability' means, for any period, the
amount obtained by, first, adding the difference, as of the end of each
day during such period, between (i) the Borrowing Base and (ii) the
unpaid principal balance of the Revolving Loan and, then, by dividing
such sum by the number of days in such period."
"'EBITDA' means, for any period, the consolidated Net Income
of Borrower and its Subsidiaries for such period, PLUS, without
duplication and to the extent deducted from revenues in determining Net
Income for such period, (a) the aggregate amount of income tax expense
for such period, (b) the aggregate amount of interest expense for such
period, and (c) all amounts attributable to depreciation and
amortization for such period, and MINUS, without duplication and to the
extent added to revenues in determining Net Income for such period, all
non-cash non-recurring gains during such period, in each case
determined in accordance with GAAP."
"'Loan Availability' means, at any time of determination, the
amount, if any, by which the Borrowing Base at such time exceeds the
unpaid principal balance of the Revolving Loan at such time."
"'Net Cash Flow Available for Principal Payments' means, for
any period, EBITDA for such period, LESS the sum of the following
without duplication: interest expense paid in cash during such period,
income taxes due with respect to such period, the increase or decrease
in non-cash working capital for such period, Non-Financed Capital
Expenditures made during such period, costs and expenses incurred by
Borrower in such period to provide Kaizen consulting and training, and
restructuring expenses incurred by Borrower in such period (not
including, with respect to Kaizen expenses and restructuring expenses,
amounts reserved for such expenses but not charged against
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income for such period), in each case determined in accordance with
GAAP unless otherwise defined herein."
Section 2.03. Amendment of Section 2.6. SECTION 2.6 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 2.6 Repayment of Term Loan. The Term Loan is due and
payable as follows: (i) accrued and unpaid interest, calculated at the
rate set forth in SECTION 3.1, shall be due and payable commencing on
MARCH 1, 2000, and continuing on the first (1st) day of each month
thereafter, and (ii) principal installments (a) in the amount of
$60,000 each shall be due and payable on the first (1st) day of each
month, commencing on JANUARY 1, 2001, and continuing thereafter through
and including DECEMBER 1, 2001, and (b) in the amount of $50,000 each
shall be due and payable on the first (1st) day of each month,
commencing on JANUARY 1, 2002, and continuing thereafter through the
Termination Date, when the then unpaid principal balance of the Term
Loan, together with all accrued and unpaid interest, shall be due and
payable in full."
Section 2.04 Amendment of Section 3.2. SECTION 3.2 of the Loan
Agreement is hereby amended by adding thereto the following as subsection (g):
"(g) Borrower shall pay to Lender, in consideration of
consenting to the merger of Borrower and TBM Acquisition I, Inc. and
entering into Amendment One to the Loan Agreement and waiving the
Events of Default existing prior to the execution of Amendment One, a
closing fee of $125,000, one-half payable upon execution of Amendment
One and the remaining amount payable on or before the earlier of (i)
the termination of this Agreement or (ii) April 1, 2001. Such closing
fee shall be fully earned upon the execution of Amendment One to the
Loan Agreement."
Section 2.05. Amendment of Section 3.5(b). SECTION 3.5(b) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(b) Early Termination. Upon 60 days prior written notice to
the Lender, the Borrower may terminate this Agreement prior to the
Termination Date. If Borrower terminates this Agreement prior to the
Termination Date, Borrower acknowledges that (i) such termination would
result in the loss to Lender of the benefits of this Agreement and that
the damages incurred by Lender as a result of such termination are and
would be difficult of ascertainment, and (ii) no such termination shall
be effective until Borrower has paid to Lender all of the Obligations
in immediately available funds, together with a sum certain as
liquidated damages. Such liquidated damages, being Borrower' and
Lender's best and fairest estimate of Lender's damages caused by such
termination, shall be equal to (i) $100,000 if the termination occurs
on or prior to Xxxxx 00, 0000, (xx)
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$75,000 if the termination occurs after March 31, 2001 but on or prior
to March 31, 2002. No liquidated damages will be payable if the
termination occurs after March 31, 2002."
Section 2.06. Amendment of Section 4.3. SECTION 4.3(f) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(f) Adverse Change. No changes having a Material Adverse
Effect (or that could reasonably be expected to cause or have a
Material Adverse Effect) have occurred since the date of Amendment One
to this Agreement."
Section 2.07. Amendment of Section 6.1. SECTION 6.1 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 6.1 Security Interest. To secure the payment and
performance of the Obligations, Borrower hereby mortgages, pledges and
assigns to Lender for itself, and as agent for its Affiliates, all of
the Collateral, and grants to Lender for itself, and as agent for its
Affiliates, a security interest and Lien in and upon, all of the
Collateral."
Section 2.08. Amendment of Article VI. ARTICLE VI of the Loan Agreement
is hereby amended by adding thereto the following as SECTION 6.15:
"Section 6.15 Release of Houston Real Estate. Upon the
effectiveness of Amendment One to this Agreement, Lender shall release
the Borrower's Little Rock, Arkansas real estate from any Lien. Lender
agrees to release the Borrower's Houston, Texas real estate from any
Lien if, but only if, (i) Borrower's Net Cash Flow Available for
Principal Payments for the calendar year ending December 31, 2001, as
established by Borrower's audited financial statements for such year,
equals or exceeds $1,021,000 and (ii) at the time such financial
statements are delivered to Lender there is no Default or Event of
Default then existing."
Section 2.09. Amendment of Section 8.1. SECTION 8.1(b) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(b) Monthly Financial Statements. As soon as available, but
in any event within forty (40) days after the end of each month of
Borrower, copies of the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of the end of such month and the
related unaudited income statement for Borrower and its Subsidiaries
for such month and for the portion of the fiscal year of Borrower
through such month, certified by the chief financial officer of
Borrower as presenting fairly the financial condition and results of
operations of the Borrower and its Subsidiaries as of the date thereof
and for the periods ended on such date, subject to normal year end
adjustments."
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Section 2.10. Amendment of Section 8.4. SECTION 8.4 of the Loan
Agreement is hereby amended by adding thereto the following as subsection (c):
"(c) Within five Business Days of the filing thereof, copies
of all Forms 10-K and Forms 10-Q filed by TBM Holdings, Inc. with the
Securities Exchange Commission."
Section 2.11. Amendment of Section 9.1. SECTION 9.1 of the Loan
Agreement is hereby amended by deleting subsections (b) and (c) in their
entirety and substituting therefor the following subsections (b) and (c) and
adding thereto the following subsection (d):
"(b) Minimum Fixed Charge Coverage Ratio. Permit, as of the
last day of any calendar month during any period set forth below, the
Fixed Charge Coverage Ratio for such month, to be less than the ratio
set forth opposite such period below:
Period Fixed Charge Coverage Ratio
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January 1, 2001 through December 31, 2001 1.00 to 1.0
January 1, 2002 and thereafter 1.10 to 1.0
(c) Minimum Tangible Net Worth. Permit the Tangible Net Worth
of Borrower and its Subsidiaries on the date of Amendment One to this
Agreement to be less than $7,500,000 less balance sheet adjustments
proposed by Borrower within thirty (30) days of the date of such
Amendment One and to which Lender consents in writing (such balance
sheet adjustments are referred to herein as the "ADJUSTMENTS") or
permit, at any time during any period set forth below, the consolidated
Tangible Net Worth of Borrower and its Subsidiaries to be less than the
amount set forth opposite such period below:
Period Minimum Tangible Net Worth
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Effective Date through September 29, 2001 $5,000,000 less the Adjustments
September 30, 2001 through December 30, 2001 $5,250,000 less the Adjustments
December 31, 2001 through March 30, 2002 $5,500,000 less the Adjustments
March 31, 2002 through June 29, 2002 $5,750,000 less the Adjustments
June 30, 2002 through September 29, 2002 $6,250,000 less the Adjustments
September 30, 2002 and thereafter $6,500,000 less the Adjustments
(d) Minimum Net Income. Permit its Net Income for any period
set forth below to be more negative than the negative amount set forth
opposite such period below:
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Period Minimum Net Income
Fiscal quarter ending June 30, 2000 $(650,000)
Fiscal quarter ending September 30, 2000 $(950,000)
Fiscal quarter ending December 31, 2000 $(600,000)
Fiscal quarter ending March 31, 2001 $(600,000)
Two consecutive Fiscal quarters ending June 30, 2001 $(377,000)"
Section 2.12. Amendment of Section 9.2. SECTION 9.2 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 9.2 Investments. Acquire any Investment or permit any
Investment to be outstanding, other than Permitted Investments and
other than Investments (a) with respect to which Borrower has provided
to Lender at least fifteen (15) days written notice prior to the
closing thereof and (b) which (i) constitute the acquisition of a
company or product line that have products complimentary with Borrower
and its Subsidiaries and (ii) entail either consolidation of existing
production facilities or cost savings in general and administrative
expenses by selling products through existing channels with Borrower's
sales representative and independent sales representatives and (c) the
integration of which or the consummation of which will not cause a
Default or Event of Default."
Section 2.13. Amendment of Section 9.3. SECTION 9.3 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 9.3 Prohibited Distributions and Payments, Etc.
Declare or make any Prohibited Distribution or Prohibited Payment;
provided, that Borrower may declare and pay dividends to TBM Holdings,
Inc. ("HOLDINGS"), in an aggregate amount equal to the income tax
liability of Holdings attributable to the separate taxable income of
Borrower and its Subsidiaries.
Section 2.14. Amendment of Section 9.6. SECTION 9.6 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 9.6 Merger, Consolidation, Sale of Assets,
Acquisitions. (i) Merge or consolidate with any other Person or (ii)
sell, lease or transfer or otherwise dispose of all or a substantial
portion of Borrower's assets to any Person or (iii) acquire all or
substantially all of the assets of any Person or the assets
constituting the business or a division or operating unit of any Person
unless with respect to such acquisition the parameters for Investments
set forth in SECTION 9.2 are met."
Section 2.12. Amendment of Section 9.9. SECTION 9.9 of the Loan
Agreement is hereby deleted in its entirety and replace with the following:
"Section 9.9 [This section is intentionally omitted.]"
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Section 2.13. Amendment of Section 9.13. SECTION 9.13 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 9.13 Management Fees. Directly or indirectly pay or
agree to pay any management, consulting, training or similar fees and
expenses (other than payments to consultants hired by Borrower in lieu
of salaries paid to officers of Borrower) to any Person that exceed, in
the aggregate for any calendar year, the amounts set forth below for
the applicable calendar year:
Applicable Calendar Year Maximum Aggregate Amount
2000 $450,000
2001 $450,000
2002 $375,000
2003 through the Termination Date $75,000
provided, that the existing contractual obligation of TBM Holdings,
Inc. to Colt Capital Group, Inc. in the amount of $150,000 per year,
payable monthly, may be paid in addition to the management fees
permitted by this Section 9.13 as long as no Event of Default is
existing at the time of such payment or would be caused thereby."
Section 2.14. Amendment of Article IX. ARTICLE IX of the Loan Agreement
is hereby amended by adding thereto the following as SECTION 9.14 and SECTION
9.15:
"Section 9.14 Minimum Availability. Permit its Loan
Availability at any time to be less than $400,000."
"Section 9.15 Balance Sheet Adjustments. Make any adjustments
to its balance sheet as at the date of Amendment One hereto without the
prior written consent of Lender."
Section 2.15. Amendment of Section 10.1. SECTIONS 10.1(o) AND 10.1(p)
of the Loan Agreement are hereby amended in their entirety to read as follows:
"(o) TBM Holdings, Inc., shall cease to own a majority of the
outstanding shares of capital stock of Borrower entitled to vote for
directors (including stock that has been issued following the exercise
or conversion of any warrants or convertible securities owned by any
Person);
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(p) Xxxxxxx X. Xxxxxxxx shall for any reason cease to serve as
President of TBM Holdings, Inc., or Xxxxxxx X. Sample shall for any
reason no longer serve as either the Vice President or Chief Executive
Officer of Borrower and 60 days shall have elapsed during which time no
replacement reasonably satisfactory to the Lender shall have been
appointed; or"
Section 2.16. Amendment of Section 10.1. SECTION 10.1 of the Loan
Agreement shall be further amended by adding thereto the following as subsection
(q):
"(q) TBM Holdings, Inc. shall (i) repudiate its obligations
under, or commit an anticipatory breach of, its unlimited guaranty of
the Obligations executed for the benefit of Lender or (ii) attempt to
terminate such guaranty or (iii) commence any legal proceeding to
terminate or hold invalid in any respect such guaranty."
ARTICLE III
Conditions Precedent
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Section 3.01. Conditions Precedent. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lender:
(a) The representations and warranties of Borrower contained
herein and of Borrower and TBM Acquisition I, Inc. in the Merger
Agreement shall be true and correct as of the date hereof as if made on
the date hereof;
(b) After giving effect to the provisions of this Amendment,
no Default or Event of Default shall have occurred and be continuing
under the Loan Agreement;
(c) Lender shall have received this Amendment and the Renewal
and Extension Revolving Note and the Renewal and Extension Term Note in
the forms of EXHIBIT A and EXHIBIT B attached hereto, duly executed by
Borrower;
(d) TBM Holdings, Inc. shall have executed and delivered to
Lender an unlimited guaranty of the Obligations, in form and substance
acceptable to Lender in its sole discretion;
(e) Lender shall receive an opinion of Borrower's counsel, in
form and substance acceptable to Lender in its sole discretion;
(f) Upon the Merger, Borrower shall make such payments to
Lender as are necessary to reduce the outstanding principal balance of
the Revolving Loan to
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$5,500,000 and to reduce the outstanding principal balance of the Term
Loan to $2,500,000;
(g) Borrower's Loan Availability upon the effectiveness of the
Merger and after all payments required in connection with the Merger or
as conditions to effectiveness of this Amendment shall be at least
$1,000,000;
(h) Upon the effectiveness of the Merger, the outstanding
principal of Subordinated Debt of the Borrower shall not exceed
$4,000,000;
(i) Xxxxxxx X. Xxxxxx shall be serving as Borrower's Chief
Financial Officer;
(j) The holders of the Subordinated Debt shall have executed
and delivered to Lender amendments of the Subordination Agreements
governing such Subordinated Debt in form and substance acceptable to
Lender in its sole discretion;
(k) Lender shall have received from a title insurance company
acceptable to Lender in its sole discretion a Commitment for Mortgagee
Policy of Title Insurance on Borrower's Houston, Texas real estate
providing for the issuance of mortgagee title policy in the amount of
$2,100,000 and containing only such exceptions as are acceptable to
Lender in its sole discretion;
(l) Borrower shall have executed and delivered to Lender a
Modification of Deed of Trust in such form and content as is required
by Lender in its sole discretion relating to Borrower's Houston, Texas
real estate;
(m) Borrower shall have paid to Lender, in consideration of
consenting to the Merger and amending the Loan Agreement as set forth
herein and waiving the Events of Default existing prior hereto,
one-half of the $125,000 closing fee;
(n) Borrower shall have delivered to Lender certified board of
directors resolutions and certificates of incumbency, in such form and
content as is acceptable to Lender in its sole discretion, for both
Borrower and TBM Holdings, Inc.;
(o) Borrower shall have delivered to Lender a Certificate of
Merger issued by the Secretary of State of Delaware certifying that the
Merger has become effective;
(p) Borrower shall execute and deliver to Lender such
financing statements and amendments to financing statements as Lender
shall require for filing with various governmental offices;
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(q) 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
reasonably satisfactory to Lender and its legal counsel.
ARTICLE IV
Ratifications, Representations, and Warranties
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Section 4.01. Ratifications by Borrower. 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, except as expressly modified and
superseded by this Amendment, the terms and provisions of the Loan Agreement are
ratified and confirmed and shall continue in full force and effect. The Loan
Agreement as amended by this Amendment shall continue to be the legal, valid,
binding and enforceable in accordance with its terms. Borrower, as the surviving
corporation of the Merger, acknowledges that it is primarily liable for all
Obligations, now existing or hereafter arising under the Loan Agreement.
Section 4.02. Renewal and Extension of Security Interests and
Assignments. Borrower hereby renews and affirms the liens and security interests
created and granted in the Loan Agreement and all other Loan Documents. Borrower
agrees that this Amendment shall in no manner affect or impair the liens and
security interests securing the Obligations, and that such liens and security
interests shall not in any manner be waived, the purposes of this Amendment
being to modify the Loan Agreement as herein provided, and to carry forward all
liens and security interest securing same, which are acknowledged by Borrower to
be valid and subsisting.
Section 4.03. Representations and Warranties. Borrower represents and
warrants to Lender as follows: (i) the execution, delivery and performance of
this Amendment and any and all other Loan Documents 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 articles of incorporation or
bylaws of Borrower or any agreement to which Borrower is a party; (ii) the
representations and warranties of Borrower and TBM Acquisition I, Inc.,
contained in the Merger Agreement are true and correct on and as of the date
hereof as though made on and as of the date hereof; (iii) no Default or Event of
Default under the Loan Agreement as amended hereby has occurred and is
continuing; and (iv) Borrower is in full compliance with all covenants and
agreements contained in the Loan Agreement, as amended hereby.
Section 4.04. Waiver of Defaults. Upon the effectiveness of this
Amendment, any and all Defaults and Events of Default that previously existed
under the Loan Agreement prior to amendment hereby or under any of the other
Loan Documents shall be waived.
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ARTICLE V
Miscellaneous
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Section 5.01. Survival of Representations and Warranties. All
representations and warranties made in the Merger Agreement, this Amendment or
any other Loan Document furnished in connection with this Amendment shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect such
representations and warranties or the right of Lender to rely thereon.
Section 5.02. Reference to Loan Agreement. Each of the Loan Documents,
including the Loan Agreement 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 such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.
Section 5.03. Expenses of Lender. Borrower agrees to pay on demand all
costs and expenses incurred by Lender in connection with the preparation,
negotiation and execution of this Amendment and the other Loan Documents
executed pursuant hereto (provided that the legal fees reimbursable by Borrower
for the preparation, negotiation and execution of this Amendment and such Loan
Documents shall be limited to $10,000). Borrower agrees to pay on demand all
costs and expenses incurred by Lender in connection with any and all future
amendments, modifications, and supplements to the Loan Agreement, including,
without limitation, the costs and fees of Lender's legal counsel, and all costs
and expenses incurred by Lender in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby, or any
other Loan Document, including, without limitation, the reasonable costs and
fees of Lender's legal counsel.
Section 5.04. 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.
SECTION 5.05. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO HAVE
BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
Section 5.06. Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors, and
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legal representatives, except that none of the parties hereto other than Lender
may assign or transfer any of its rights or obligations hereunder without the
prior written consent of Lender.
Section 5.07. 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. This Amendment may be executed and delivered by facsimile
transmission.
Section 5.08. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.09. Conflicting Provisions. If any provision of the Loan
Agreement as amended hereby conflicts with any provision of any other Loan
Document, the provision in the Loan Agreement shall control.
SECTION 5.10. RELEASE. AS OF THE DATE HEREOF, BORROWER HEREBY
ACKNOWLEDGES THAT BORROWER 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 BORROWER'S LIABILITY TO REPAY
THE LOAN OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM
LENDER. BORROWER VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES
LENDER, ITS PREDECESSORS, 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 OR HEREAFTER HAVE AGAINST LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND
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ASSIGNS, IF ANY, AND IRRESPECTIVE OR WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM
ANY LOAN, 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 LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
Section 5.11 Forbearance Agreement. The First Amended and Restated
Forbearance Agreement (the "FORBEARANCE AGREEMENT") among Lender, Borrower and
the Subordinated Creditors named therein, dated as of January 31, 2000, is
terminated upon the effectiveness of this Amendment, and accordingly Lender's
obligations (i) to forbear from exercising any rights or remedies upon the
occurrence of a Default or Event of Default and (ii) to make any overadvances to
Borrower shall likewise terminate.
SECTION 5.12. ENTIRE AGREEMENT. THIS AMENDMENT, THE LOAN AGREEMENT AND
ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH AND PURSUANT
TO THIS AMENDMENT AND THE LOAN AGREEMENT 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.
EXECUTED as of the date first written above.
LONG REACH HOLDINGS, INC. BANK ONE, TEXAS, NATIONAL ASSOCIATION
/s/ Xxxxxxx X. Xxxxxxxx /s/ X. X. XxXxxxxx
By:_____________________________ By:____________________________
Xxxxxxx X. Xxxxxxxx X. X. XxXxxxxx
Name:_________________________ Name:_________________________
CEO Vice President
Title:__________________________ Title:__________________________
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