1
SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT
(with Borrowing Base)
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT (this
"Amendment") dated effective as of July 21, 1997 (the "Effective Date"), is by
and between XXXXXXXX INDUSTRIES, INCORPORATED ("Borrower"), and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association ("Bank").
PRELIMINARY STATEMENT. Bank and Borrower have entered into an Amended And
Restated Letter Agreement dated as of April 1, 1995 and First Amendment to
Amended and Restated Letter Agreement dated as of April 1, 1997 (collectively,
"Credit Agreement"). The "Agreement", as used in the Credit Agreement, shall
also refer to the Credit Agreement as amended by this Amendment. All
capitalized terms defined in the Credit Agreement and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement. Bank and
Borrower have agreed to amend the Credit Agreement to the extent set forth
herein, and in order to, among other things, renew, increase, modify and extend
the Advance Note.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, Bank and Borrower hereby agree as follows:
1. Advance/Term Note. Section 1.2 of the Credit Agreement is amended by
substituting the following 1.2 for the previous Section 1.2 of the Credit
Agreement:
"Section 1.2 ADVANCE LINE OF CREDIT The Bank agrees to make advances
(an "Advance" and "Advances") in an aggregate amount of $4,700,000.00,
pursuant to an Advance Commitment ("Advance Commitment") as evidenced
by that certain Advancing Promissory Note Converting To A Term Note
dated July 21, 1997 in the original principal amount of $4,700,000.00
executed by the Borrower payable to the order of the Bank and having a
final maturity date of August 1, 2003 (together with any and all
renewals, extensions, modifications, rearrangements and replacements
thereof and substitutions therefor, the "Advance/Term Note") which is
given in renewal, increase, modification and extension of that certain
promissory note dated December 1, 1993 in the original principal
amount of $4,000,000.00 maturing on December 1, 1999, (including all
prior notes of which said note represents a renewal, extension,
modification, increase, substitution, rearrangement or replacement
thereof, the "Renewed Note"). The parties hereto agree that there is
as of the Effective Date an outstanding principal balance of
$1,200,000.00 under the Advance Note. The "Advance Note" as used in
the Credit Agreement shall also refer to the "Advance/Term Note" as
used in this Amendment. The purpose of the Advance/Term Note is: to
purchase equipment up to $3,500,000.00 and to refinance existing debt
of $1,200,000.00.
2. The Credit Agreement is amended to amend Exhibit A, attached hereto for all
purposes.
3. Borrower hereby represents and warrants to the Bank that after giving effect
to the execution and delivery of this Amendment: (a) the representations and
warranties set forth in the Credit Agreement are true and correct on the date
hereof as though made on and as of such date; and (b) no Event of Default, or
event which with passage of time, the giving of notice or both would become an
Event of Default, has occurred and is continuing as of the date hereof.
4. This Amendment shall become effective as of the Effective Date upon its
execution and delivery by each of the parties named in the signature lines
below, and the "Agreement" as used in the Credit Agreement shall also refer to
the Credit Agreement as amended by this Amendment.
5. Borrower further acknowledges that each of the other Loan Documents is in
all other respects ratified and confirmed, and all of the rights, powers and
privileges created thereby or thereunder are ratified, extended, carried
forward and remain in full force and effect except as the Credit Agreement is
amended by this Amendment.
6. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
7. This Amendment shall be included within the definition of "Loan Documents"
as used in the Agreement.
8. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND AS APPLICABLE, THE LAWS OF THE UNITED STATES OF
AMERICA.
THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS & COMMERCE
CODE, AND REPRESENTS 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the Effective Date.
BORROWER: XXXXXXXX INDUSTRIES, INCORPORATED
By: /s/ XXX XXXXXX
---------------------------------
Name: Xxx Xxxxxx
-------------------------------
Title: Senior Vice President-Finance
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Address: Houston, Texas
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BANK: TEXAS COMMERCE BANKNATIONAL ASSOCIATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
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Page 1 of 1
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EXHIBIT A to Agreement between
XXXXXXXX INDUSTRIES, INCORPORATED ("Borrower") and Texas Commerce
Bank National Association ("Bank") dated the Effective Date
as same may be amended, restated and supplemented in writing
REPORTING REQUIREMENTS, FINANCIAL COVENANTS
AND
COMPLIANCE CERTIFICATE FOR CURRENT REPORTING PERIOD ENDING
________________, 199__ ("END DATE")
A. REPORTING PERIOD. THIS EXHIBIT WILL BE IN PROPER FORM AND BE SUBMITTED
QUARTERLY.
B.
======================================================================================================================
Financial Reporting. Borrower will provide the following financial information within Compliance
------------------- the times indicated: Certificate
======================================================================================================================
WHO WHEN DUE WHAT Compliance
--- -------- ---- (Circle)
Yes No
BORROWER (i) Quarterly at such time as Borrower's 10-Q together Yes No
this statement is submitted to with a certificate of
the Securities and Exchange compliance duly executed by
Commission ("SEC") an officer of Borrower
(ii) On an annual basis at such Borrower's 10-K together Yes No
time as this statement is with a certificate of
submitted to the Securities and compliance duly executed by
Exchange Commission ("SEC") an officer of Borrower
======================================================================================================================
C.
======================================================================================================================
FINANCIAL COVENANTS. COMPLIANCE CERTIFICATE
------------------- ----------------------
Borrower will comply with
the following financial
covenants, defined in
accordance with GAAP
incorporating the
calculation adjustments
indicated on the Compliance
Certificate:
REQUIRED ACTUAL REPORTED Compliance
-------- ---------------
Except as specified For Current Reporting Period/as of the End Date (Circle)
otherwise, each covenant Yes No
will be maintained at all
times and reported for each
Reporting Period or as of
each Reporting Period End
Date, as appropriate:
1. Maintain a Working $ - $ = $ Yes No
------------------- --------------------------- ----------------
Capital of at least
$10,000,000.00. Current Assets Current Liabilities Working Capital
2. Maintain a Tangible Net Stockholders' Equity $ Yes No
-------------
Worth as adjusted of at least Minus: Goodwill $
$18,200,000.00 at all times. -------------
Other Intangible Assets $
-------------
Plus: Subordinated Debt $
-------------
Equals Tangible Net Worth $
-------------
Thereafter, said required
------------
minimum Tangible Net Worth Beginning March 31, 1996 and thereafter:
----------------------------------------
to be increased annually FYE 1997 FYE 1998
-------------------------- --------
calculated as the amount (x) $17,500,000.00 ________
equal to the sum of (x) the Plus (y) ___________ ________
immediately preceding year's Equals: Required minimum Tangible Net Worth
required amount plus (y) 20% beginning March 31, 1996 and thereafter:
of the immediately preceding
---------------
year's net income.
3. Maintain a Current Ratio $ /$ = $ Yes No
------------------- ----------------------- --------------------
of at least 2.00 to 1.00. Current Assets Current Liabilities Current Ratio
4 Maintain a ratio of Total Total Indebtedness (GAAP) $ Yes No
-----------------
Indebtedness to Tangible Net
Worth plus Subordinated Debt Tangible Net Worth $
no greater than 1.10 to 1.00 -----------------
at all times.
$ /$ = $
------------------------- ------------------------- ------------
Total Indebtedness Tangible Net Worth Ratio
5. Maintain a fixed charge For all items except maturities of long term debt, show amounts for Yes No
ratio all times for the current month plus previous 11 months:
preceding 12 month period as ------- --------
of March 31, of each year of Ordinary Net income $
-----------------
at least 1.25 to 1.00. Plus: Depreciation $
-----------------
Interest Expense $
-----------------
Tax Expense $
-----------------
Minus: Cash taxes $
-----------------
Equals: Available Cash Flow $
-----------------
Scheduled Principal
Payments made by Borrower $
-----------------
Plus: Interest Expense $
-----------------
Capital Expenditures
(non-financed)
$_________________
Equals: Total Fixed Charges $ __
---------------
$ / $ =
----------------------- ------------------------ ---
----------
Available Cash Flow Total Fixed Charges Ratio
=================================================================================================================
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EXHIBIT A Page 1 of 2
THE ABOVE SUMMARY REPRESENTS SOME OF THE COVENANTS AND AGREEMENTS CONTAINED IN
THE NOTE AND DOES NOT IN ANY WAY RESTRICT OR MODIFY THE TERMS AND CONDITIONS OF
THE NOTE. IN CASE OF CONFLICT BETWEEN THIS EXHIBIT A AND THE NOTE, THE NOTE
SHALL CONTROL.
The undersigned hereby certifies that the above information and computations
are true and correct and not misleading as of the date hereof, and that since
the date of the Borrower's most recent Compliance Certificate (if any):
[ ] No default or Event of Default has occurred under the Note
during the current Reporting Period, or been discovered from a
prior period, and not reported.
[ ] A default or Event of Default (as described below) has occurred
during the current Reporting Period or has been discovered from
a prior period and is being reported for the first time
and:
[ ] was cured on ___________________________________.
[ ] was waived by Bank in writing on _______________________
[ ] is continuing.
Description of Event of Default:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Executed this ____________ day of _________________________, 19________________.
BORROWER: XXXXXXXX INDUSTRIES, INCORPORATED
SIGNATURE:
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NAME:
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TITLE:
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ADDRESS:
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EXHIBIT A Page 2 of 2
