SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER OF DEFAULT
SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND
WAIVER OF DEFAULT
THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER OF DEFAULT (this
“Agreement”) is made and entered into as of the ___ day of December, 2005, by
and among TEXTRON
FINANCIAL CORPORATION,
a
Delaware corporation (“Lender”), and OMNI
USA, INC.,
a
Washington corporation, and XXXXXX
PRODUCTS CORP.,
a
Kentucky corporation (individually a “Borrower” and collectively the
“Borrowers”).
W I T N E S S E T
H:
WHEREAS,
Borrowers and Lender are parties to that certain Loan and Security Agreement
dated as of August 2, 2004 (as amended, restated, modified or supplemented
from
time to time, the “Loan Agreement”; all documents and instruments executed in
connection therewith may be referred to collectively as the Loan Documents);
and
WHEREAS,
Each Borrower is currently a wholly-owned subsidiary of Omni U.S.A., Inc.,
a
Nevada corporation, (“Omni Nevada”); and
WHEREAS,
among other documents and instruments the Obligations (as defined in the Loan
Agreement) are secured by that certain Stock Pledge Agreement dated as of August
2, 2004 from Omni Nevada to Lender; and
WHEREAS,
Omni Nevada shall sell all of the capital stock of the Borrowers to Xxxxxxx
X.
Xxxxxx and Xxxxx X. Xxxxxx, and Xxxxxx Xxxxxx (collectively the “Xxxxxxx”) in
accordance with that certain Stock Purchase Agreement dated as of
_______________, 2005 (the “Spin Off Agreement”), and the Xxxxxxx intend to
subsequently contribute all of the capital stock of the Borrowers to Asia
Capital, Inc., a Nevada corporation (“Asia”) wholly-owned by Xxxxxxx X. Xxxxxx,
Xxxxx X. Xxxxxx, and Xxxxxx Xxxxxx (the “Spin Off”); and
WHEREAS,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, and Xxxxxx Xxxxxx each intend to enter
into
a promissory note in favor of Omni Nevada as payment of the entire purchase
price of the Spin Off (the “Spin Off Debt”); and
WHEREAS,
Omni Nevada has entered into an Agreement and Plan of Merger dated as of
_______________, 2005 (the “Merger Agreement”) by and among Omni Nevada, Omni
Merger Sub, Inc., a wholly-owned subsidiary of Omni Nevada (“Omni Sub”) and
Brendan Technologies, Inc. (“Brendan”) whereby immediately subsequently to or
contemporaneously with the Spin Off, Omni Sub will be merged into Brendan (the
“Merger”), and Brendan will be the surviving corporation in the Merger;
and
WHEREAS
the Merger and the Spin Off (collectively, the “Transaction”) each separately
and collectively constitute a Change of Control which is a default and an Event
of Default under the Loan Agreement; and
WHEREAS,
Borrowers have requested that Lender waive such defaults prospectively, and
Lender is willing to do so on the terms and conditions set forth herein;
and
WHEREAS,
Borrowers and Lender desire to amend the Loan Agreement and other Loan Documents
on the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Capitalized
Terms.
All
capitalized terms used herein and not otherwise expressly defined herein shall
have the respective meanings given to such terms in the Loan
Agreement.
2. Acknowledgment
of Defaults.
Borrowers hereby acknowledge and agree that the Transaction would constitute,
inter alia, a default under Section
7.7
of the
Loan Agreement (the “Change of Control Covenant”) and an Event of Default under
Section
9.1(c)
as a
result of the Change of Control of Borrower (the “Change of Control Default”).
3. Waiver
of Default Resulting from Change of Control.
Lender
hereby waives the Change of Control Default occasioned by the Transaction.
Lender reserves its rights and remedies with respect to any other Event of
Default.
4. Amendment
of Definition of “Change
of Control”.
The
Loan
Agreement is hereby amended by deleting the definition of “Change of Control” in
its entirety and substituting the following in lieu thereof:
“Change
of
Control” means the occurrence of any of the following events: (i) the sale or
transfer of all or substantially all of the assets of the Borrower as an
entirety to any person or related group of persons other than an Affiliate
or
Affiliates of the Borrower; (ii) Xxxxxxx X. Xxxxxx and/or Xxxxx X. Xxxxxx shall
cease to control the Borrower, or either of them; (iii) Asia Capital, Inc.,
a
Nevada corporation, shall cease to own all of the stock of Borrower, or either
of them, or (iv) the Borrower, or either of them, is liquidated, dissolved,
or
adopts a plan of liquidation pursuant to the Bankruptcy Code or any other
bankruptcy law.
5. Amendment
of Definition of “Guarantor” and “Guarantors”.
The Loan
Agreement is hereby amended to reflect the release of Omni Nevada’s Guaranty by
deleting the definition of “Guarantor” or “Guarantors” in its entirety and
substituting the following in lieu thereof:
“Guarantor”
or “Guarantors” means (a) with respect to those recourse Guaranties executed or
to be executed in connection herewith, Asia Capital, Inc., a Nevada corporation,
Xxxxxxx X. Xxxxxx, and Xxxxx X. Xxxxxx, (b) with respect to the Validity
Guaranty executed in connection herewith, Xxxxx Xxxxxxx, and (c) each other
Person guaranteeing to Lender all or part of the Obligations.
6. Amendment
of Definition of “Guaranty” and “Guaranties”.
The Loan
Agreement is hereby amended by deleting the definition of “Guaranty” or
“Guaranties” in its entirety and substituting the following in lieu
thereof:
“Guaranty”
or “Guaranties” means each of (a) that recourse Guaranty dated on or about
December __, 2005 by Asia Capital, Inc., a Nevada corporation, (b) that recourse
Guaranty dated as of August 2, 2004 by Xxxxxxx X. Xxxxxx, (c) that recourse
Guaranty dated on or about July 16, 2004 by Xxxxx X. Xxxxxx, (d) that Validity
Guaranty dated on or about July 15, 2004 by Xxxxx Xxxxxxx, and (e) any other
guaranty executed and delivered by a Guarantor in favor of Lender, in each
case
in form and substance satisfactory to Lender.
7. Amendment
of Adjusted Tangible Net Worth Covenant.
Borrowers and Lender understand and agree that, upon completion of the
Transaction, Section
7.6 (b)
of the
Loan Agreement shall be amended to reset the Adjusted Tangible Net Worth
covenant to a level reflective, in the Lender’s sole discretion, of each
Borrower’s equity structure as it is exists after the completion of the
Transaction.
8. Delivery
in Trust of Shares of Borrowers.
Lender
shall deliver the originals of certificates representing one hundred percent
(100%) of the issued and outstanding shares of each Borrower to Omni Nevada
to
hold in trust for the purpose of allowing Omni Nevada to consummate the Spin
Off
as set forth in the Spin Off Agreement.
9. Conditions
of Effectiveness.
This
Amendment, and the consents, waivers, releases, and modifications contained
herein, shall become effective as of the date of this Amendment upon
satisfaction of all of the following conditions precedent:
(a) Lender’s
receipt of a true and correct copy of each of the Spin Off Agreement and Merger
Agreement, fully executed by the parties thereto, each in form and substance
acceptable to Lender.
(b) Completion
of the Spin Off to the satisfaction of Lender as contemplated by the Spin Off
Agreement.
(c) Completion
of the Merger to the satisfaction of Lender as contemplated in the Merger
Agreement.
(d) To
the
satisfaction of the Lender, all intellectual property, including but not limited
to trademarks, patents, and trade names, held by Omni Nevada shall be
transferred to Asia prior to or contemporaneously with the Merger Transaction
and shall be and remain subject to the lien and security interest of Lender
therein,.
(e) Asia
shall
execute a recourse Guaranty, in form and substance acceptable to Lender in
its
sole discretion, unconditionally guaranteeing Lender’s receipt of the full
amount of the Indebtedness.
(f) Asia
shall
execute a stock pledge agreement in favor of Lender granting a security interest
in and to one hundred percent (100%) of the issued and outstanding stock of
the
Borrowers and shall deliver to Lender duly executed original stock powers in
connection therewith.
(g) Xxxxxxx
X.
Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxx Xxxxxx shall each execute a stock pledge
agreement in favor of Lender granting a security interest in and to one hundred
percent (100%) of the issued and outstanding stock of Asia and shall deliver
to
Lender duly executed original stock powers in connection therewith.
(h) Borrowers
shall deliver to Lender a true and correct copy of the promissory note executed
by Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, and Xxxxxx Xxxxxx in favor of Omni Nevada
in connection with the Spin Off Debt, and the entire amount of the Spin Off
Debt
shall be evidenced by a promissory note reflecting Xxxxxxx X. Xxxxxx, Xxxxx
X.
Xxxxxx, and Xxxxxx Xxxxxx as Maker.
(i) Borrowers
shall pay to Lender the full amount of the Waiver and Amendment Fee (defined
herein below).
(j) Borrowers
shall pay to Lender the full amount of any and all legal costs incurred by
Lender in connection with this Agreement.
10. Merger
Further Assurances.
Each
Borrower hereby covenants and agrees with Lender that from the date of the
Merger and continuing through the completion of the Spin Off:
(a) From
and
after the Closing (as defined in the Spin Off Agreement) Borrowers will not
transfer, or up stream, any cash from Borrower to Brendan or any entity related
to or affiliated with Brendan; and
(b) At
all
times, the Xxxxxxx or an entity substantially owned and fully controlled by
the
Xxxxxxx, xxxx have and maintain control of the Borrowers.
(c) Xxxx
is
the largest shareholder of Brendan, holding at least 19.2% of Brendan’s voting
stock.
11. Continuing
Further Assurances.
Borrowers hereby covenant and agree with Lender that from the date of the Merger
Transaction and continuing through the Termination Date:
(a) Borrowers
shall operate pursuant to a financial structure acceptable to Lender in Lender’s
sole discretion.
(b) Neither
any Borrower nor Asia shall grant, and Omni Nevada shall not receive or accept,
a security interest in, nor file a lien on, any of the assets of Borrower or
Asia.
(c) Each
Guarantor shall ratify this agreement and shall acknowledge that its respective
Guaranty is in full force and effect until specifically released by Lender
in
writing.
(d) The
Xxxxxxx or an entity owned and controlled by the Xxxxxxx shall continue to
own
and exert control over the Borrowers.
12. Default.
The
failure of any of the Merger Further Assurances in Paragraph 10 hereof, or
of
any of the Continuing Further Assurances in Paragraph 11 hereof shall constitute
a default and an Event of Default under the Loan Agreement, and the Lender
shall
be entitled to exercise any and all available remedies under the Loan Documents,
at law, or in equity, based upon said failure.
13. Waiver
and Amendment Fee.
In
consideration of the accommodations made by Lender hereunder, Borrowers agree
to
pay to Lender, no later than the
date
this Agreement is executed by Borrower and delivered to Lender, a waiver and
amendment fee, or unpaid portion thereof, in the sum of Twenty Five
Thousand
Dollars
($25,000.00) (the “Waiver and Amendment Fee”).
14. Ratification
by Borrowers.
Borrowers hereby restate, ratify, and reaffirm each and every term, condition,
representation and warranty heretofore made by it under or in connection with
the execution and delivery of the Loan Agreement, as amended hereby, and the
other Loan Documents, as fully as though such representations and warranties
had
been made on the date hereof and with specific reference to this Agreement
and
the Loan Documents.
15. Legal,
Valid, Binding, Enforceable Obligations.
Except
as
set forth herein, the Loan Documents shall be and remain in full force and
effect as originally written, and shall constitute the legal, valid, binding
and
enforceable obligation of each Borrower and each Guarantor, respectively, to
Lender.
16. Reimbursement
for Fees and Expenses.
In
consideration of the accommodations made by Lender hereunder, Borrower agrees
to
reimburse Lender for all reasonable out-of-pocket expenses incurred by Lender
in
connection with the Loans, including, but not limited to, filing fees, tax,
lien
and judgment search fees, fees of outside auditors, bank fees, outside
attorneys’ fees, and any other reasonable fees or expenses.
17. Representation
and Warranty as to No Default.
To
induce
Lender to enter into this Agreement, Borrower hereby represents and warrants
that, as of the date hereof, and after giving effect to the terms hereof, there
exists no Event of Default under the Loan Agreement or any of the other Loan
Documents.
18. No
Offset, Defense, Counterclaim or Claim.
To
induce
Lender to enter into this Agreement, Borrower and Guarantors (a) acknowledge
and
agree that no right of offset, defense, counterclaim, claim or objection exists
in favor of Borrower and any Guarantor against Lender arising out of or with
respect to the Loan Agreement, the other Loan Documents, the Obligations, or
any
other arrangement or relationship between Lender and Borrower and/or any
Guarantor, and (b) release, acquit, remise and forever discharges Lender and
its
affiliates and all of their past, present and future officers, directors,
employees, agents, attorneys, representatives, successors and assigns from
any
and all claims, demands, actions and causes of action, whether at law or in
equity, whether now accrued or hereafter maturing, and whether known or unknown,
which any of the Borrowers or any Guarantor now or hereafter may have by reason
of any manner, cause or things to and including the date of this Agreement
with
respect to matters arising out of or with respect to the Loan Agreement, the
other Loan Documents, the Obligations, or any other arrangement or relationship
between Lender and Borrower.
19. No
Agreement to Further Modifications.
Borrower
and Guarantors acknowledge that (a) except as expressly set forth herein, Lender
has not agreed (and has no obligation whatsoever to discuss, negotiate or agree)
to any restructuring, modification, amendment, waiver or forbearance with
respect to the Obligations or any of the terms of the Loan Documents, (b) no
understanding with respect to any other restructuring, modification, amendment,
waiver or forbearance with respect to the Obligations or any of the terms of
the
Loan Documents shall constitute a legally binding agreement or contract, or
have
any force or effect whatsoever, unless and until reduced to writing and signed
by authorized representatives of Borrower, Guarantors, and Lender, and (c)
the
execution and delivery of this Agreement has not established any course of
dealing among the parties hereto or created any obligation or agreement of
Lender with respect to any future restructuring, modification, amendment, waiver
or forbearance with respect to the Obligations or any of the terms of the Loan
Documents.
20. No
Effect on Liabilities.
Each of
the Borrowers and each Guarantor hereby understand and agree that any release
of
Omni Nevada, Borrowers, or any Guarantor from their liabilities regarding the
Loan shall not affect the liability of any party not specifically released
by
Lender. Further, Borrower, Omni Nevada, and each Guarantor hereby consents
to
the Lender’s unilateral release of Omni Nevada, and waives any defense that said
release may result in a discharge or release of its liability regarding the
Loan.
21. Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same instrument.
22. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the successors
and
permitted assigns of the parties hereto.
23. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Rhode Island, other than its laws respecting choice of
law.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES
ON FOLLOWING PAGE]
IN
WITNESS
WHEREOF, Borrower and Lender have caused this Agreement to be duly executed
as
of the date first above written.
| OMNI USA, INC., a Washington corporation | ||
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| XXXXXX PRODUCTS CORP., a Kentucky corporation | ||
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| Name: | ||
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TEXTRON
FINANCIAL CORPORATION,
A Delaware corporation
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| Name: | ||
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The
undersigned Guarantors each hereby
restate, ratify, and reaffirm each and every term, condition, representation
and
warranty heretofore made by it under or in connection with the execution and
delivery of its respective Guaranty, as amended, and the other Loan Documents
to
which it is a party, as fully as though such representations and warranties
had
been made on the date hereof and with specific reference to this Agreement
and
such Loan Documents, and acknowledge
the foregoing and agree that its respective guaranty agreement in favor of
Lender remains in full force and effect, subject to no right of offset, claim
or
counterclaim.
| ASIA CAPITAL, INC., a Nevada corporation | |||
| By: | |||
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| Name: | |||
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| OMNI USA, INC., a Nevada corporation | |||
| By: | |||
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| Name: | |||
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| Title: | |||
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XXXXXXX X. XXXXXX |
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XXXXX X. XXXXXX |
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