EXHIBIT 10.2
AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT TO CREDIT AGREEMENT ("AMENDMENT") dated as of August 4,
1997 (the "AMENDMENT EFFECTIVE DATE") is made and entered into by and between
▇▇▇▇▇ SYSTEMS, INC., a Texas corporation (the "BORROWER") and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION ("LENDER"), a national banking association.
RECITALS:
WHEREAS, the Borrower and the Lender are parties to a Loan Agreement dated
as of August 30, 1996, as amended by document dated as of November 29, 1996 (the
"LOAN AGREEMENT"); and
WHEREAS, the Borrower and the Lender have agreed, on the terms and
conditions herein set forth, that the Loan Agreement be amended in certain
respects;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, IT IS AGREED:
SECTION 1. DEFINITIONS. Terms used herein which are defined in the Loan
Agreement shall have the same meanings when used herein unless otherwise
provided herein.
SECTION 2. AMENDMENT TO THE LOAN AGREEMENT. On and after the Amendment
Effective Date:
(a) The definition of "GUARANTORS" set forth in PARAGRAPH 1 of the Loan
Agreement is hereby amended to read in its entirety as follows:
GUARANTORS means ChemWay, Way Energy and Diamond.
(b) The definition of "NON-MATERIAL SUBSIDIARIES" set forth in PARAGRAPH 1
of the Loan Agreement is hereby amended to read in its entirety as follows:
NON-MATERIAL SUBSIDIARIES means ▇▇▇▇▇ Oil of Louisiana, a
corporation, In & Out Mini Mart, Inc., a corporation, EDCO Environmental,
Inc., a corporation, and Distributor Informational Systems Corporation, a
corporation.
(c) The definition of "PERMITTED ACCOUNT PAYMENT PERIOD" set forth in
PARAGRAPH 1 of the Loan Agreement is hereby amended to read in its entirety as
follows:
PERMITTED ACCOUNT PAYMENT PERIOD means 60 calendar days after the
due date of the applicable Account.
(d) The definition of "SUBSIDIARY" set forth in PARAGRAPH 1 of the Loan
Agreement is hereby amended to read in its entirety as follows:
SUBSIDIARY means, as to a particular parent Person, any other Person
of which 50% or more of the indicia of equity rights (whether outstanding
capital stock, partnership interests or otherwise) is at the time directly
or indirectly owned or held by such parent Person, or by one or more of
its Affiliates. As of the date hereof, Borrower's only Subsidiaries are
ChemWay, Way Energy, Diamond and the Non-Material Subsidiaries..
(e) The definition of "MARGIN PERCENTAGE" set forth in PARAGRAPH 1 of the
Loan Agreement is hereby amended to read in its entirety as follows:
MARGIN PERCENTAGE means (i) on any day prior to receipt of June 30,
1997 financial statements, 0.25% and (ii) on and after such receipt, the
applicable per annum percentage set forth at the appropriate intersection
in the table shown below, based on the Debt to EBITDA Ratio as of the last
day of the most recently ended fiscal quarter of Borrower calculated by
Lender as soon as practicable after receipt by Lender of all financial
reports required under this Agreement with respect to such fiscal quarter
(including a Compliance Certificate) (provided, however, that if the
Margin Percentage is increased as a result of the reported Debt to EBITDA
Ratio, such increase shall be retroactive to the date that Borrower was
obligated to deliver such financial reports to Lender pursuant to the
terms of this Agreement and provided further, however, that if the Margin
Percentage is decreased as a result of the reported Debt to EBITDA Ratio,
and such financial reports are delivered to Lender not more than ten (10)
calendar days after the date required to be delivered pursuant to the
terms of this Agreement, such decrease shall be retroactive to the date
that Borrower was obligated to deliver such financial reports to Lender
pursuant to the terms of this Agreement):
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DEBT TO
EBITDA RATIO MARGIN PERCENTAGE
-------------- --------------------
Greater than or equal to
4.00 0.50
Greater than or equal to
3.50 but less than 4.00 0.25
Greater than or equal to
2.50 but less than 3.50 0.00
Greater than or equal to
2.00 but less than 2.50 (0.25)
Less than 2.00 (0.50)
(f) A new definition of "DIAMOND" is hereby added to PARAGRAPH 1 of the
Loan Agreement, such new definition to read in its entirety as follows:
DIAMOND means Diamond Mini Mart, Inc., a Texas corporation.
(g) A new definition of "MONTHLY FINANCIAL STATEMENTS" is hereby added to
PARAGRAPH 1 of the Loan Agreement, such new definition to read in its entirety
as follows:
MONTHLY FINANCIAL STATEMENTS means the monthly financial statements
of a Person, including all notes thereto, which statements shall include a
balance sheet as of the end of such calendar month and an income statement
and a statement of cash flows for such calendar month, and for the fiscal
year to date, subject to normal year-end adjustments, all setting forth in
comparative form the corresponding figures for the corresponding calendar
month of the preceding year, prepared in accordance with GAAP and
certified as true and correct by an appropriate officer or other
acceptable party acceptable to Lender on behalf of such Person. The
Monthly Financial Statements for Borrower and its Subsidiaries shall be
prepared on both a consolidated and a consolidating basis (the parties
recognizing that such consolidating statements will be prepared in
accordance with GAAP only to the extent normal and customary).
(h) PARAGRAPH 2(A) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(a) Lender agrees, subject to all of the terms and conditions of
this Agreement (including PARAGRAPH 4 hereof), to make Loans during the
Loan Availability Period under this Paragraph to Borrower in an aggregate
principal amount at any one time outstanding up to but not exceeding
$8,700,000. Without limiting the foregoing, Borrower and Lender agree that
(i)
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the aggregate unpaid principal amount of all Loans used for the benefit of
Borrower will not exceed $2,200,000, (ii) the aggregate unpaid principal
amount of all Loans used for the benefit of ChemWay will not exceed
$6,000,000 and (iii) the aggregate unpaid principal amount of all Loans
used for the benefit of Way Energy will not exceed $500,000. Subject to
the conditions in this Agreement, any such Loan repaid during the Loan
Availability Period may be reborrowed during the Loan Availability Period
pursuant to the terms of this Agreement. Borrower and Lender agree that
Chapter 15 of the Texas Credit Code shall not apply to this Agreement, the
Note or any Loan obligation. The Loans shall be evidenced by the Note.
Lender shall in no event be obligated to fund more than one (1) Loan in
any period of 5 days. Each Loan shall be in a principal amount equal to
$100,000 or an integral multiple of $50,000 in excess thereof or the
amount by which the Commitment exceeds the sum of the Letter of Credit
Liabilities plus the unpaid principal balance of the Note, whichever is
less. Loan proceeds shall be made available to Borrower by depositing them
in an account designated by Borrower and maintained with Lender.
(i) PARAGRAPH 6(B) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(b) Borrower shall furnish or cause to be furnished to Lender three
copies of each of the following: (1) as soon as available and in any event
within 90 days after the end of each fiscal year of each Obligor that is
not an individual, Annual Financial Statements of such Obligor; (2) as
soon as available and in any event within 45 days after the end of each
calendar quarter of each fiscal year of each Obligor that is not an
individual, Quarterly Financial Statements of such Obligor; (3) Monthly
Financial Statements of Borrower, ChemWay and Way Energy, to be delivered
as soon as available and in any event within (x) 45 days after the end of
each calendar month as to Borrower and (y) 30 days after the end of each
calendar month as to ChemWay and Way Energy; (4) concurrently with the
financial statements provided for in SUBSECTIONS (1), (2) and (3) of this
PARAGRAPH 6(B), beginning with the Quarterly Financial Statements as of
December 31, 1996, such schedules, computations and other information, in
reasonable detail, as may be required by Lender to demonstrate compliance
with the covenants set forth herein or reflecting any non-compliance
therewith as of the applicable date, all certified and signed by an
appropriate officer or other responsible party acceptable to Lender on
behalf of Borrower and a compliance certificate ("COMPLIANCE CERTIFICATE")
in the form of EXHIBIT C hereto, duly executed by such officer or other
responsible party; (5)(A) on the date hereof and (B) within 5 days after
(i) the fifteenth and the last day of each calendar month or (ii) receipt
of a request therefor (which may be given from time to time) from Lender,
a Borrowing Base Certificate as at the date hereof or the fifteenth or the
last day of such calendar month or the date of such request, as the case
may be, together with such
supporting information as Lender may reasonably request; (6) on or before
15 days after the end of each calendar month, (A) a listing and aging of
the Accounts of each Obligor which has executed a Security Agreement
covering its Accounts as of the end of such calendar month, prepared in
reasonable detail and containing such information as Lender may request
and (B) a summary of the Inventory of each Obligor which has executed a
Security Agreement covering its Inventory as of the end of such calendar
month, prepared in reasonable detail and containing such other information
as Lender may
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request; (7) from time to time, at any time upon the request of Lender,
but at the cost of Borrower, a report of an independent collateral field
examiner (which may be, or be affiliated with, Lender) with respect to the
Accounts and Inventory components included in the Borrowing Base
(PROVIDED, HOWEVER, that so long as no Event of Default has occurred and
is continuing, Lender shall not require such a report more than twice per
calendar year); (8) promptly upon their becoming publicly available, one
copy of each financial statement, report, notice or definitive proxy
statement sent by any Obligor to shareholders generally, and of each
regular or periodic report and any registration statement, prospectus or
written communication (other than transmittal letters) in respect thereof
filed by any Obligor with, or received by any Obligor in connection
therewith from, any securities exchange or the Securities and Exchange
Commission or any successor agency; and (9) such other information
relating to the financial condition, operations, prospects or business of
any Obligor as from time to time may be reasonably requested by Lender.
Each delivery of a financial statement pursuant to this Paragraph shall
constitute a republication of the representations and warranties contained
in PARAGRAPH 5.
(j) A new PARAGRAPH 6(L) is hereby added to the Loan Agreement, such new
paragraph to read in its entirety as follows:
(l) Upon request by Lender, Borrower shall promptly establish a
lockbox account with Lender or another financial institution acceptable to
Lender (in its sole discretion), upon terms and conditions acceptable to
Lender (in its sole discretion), and shall thereafter direct all Account
debtors and other obligors of Borrower and its Subsidiaries to make
payments directly to such lockbox account. Disbursements from such lockbox
account shall be made only in accordance with criteria established by
Lender (in its sole discretion).
(k) PARAGRAPH 7(D) of the Loan Agreement is hereby amended to read in its
entirety as follows:
(d) Borrower will not (and will not permit any other Obligor or any
of its Subsidiaries to): (1) redeem, retire or otherwise acquire, directly
or indirectly, any shares of its capital stock; (2) pay any dividend
except stock dividends and dividends paid to Borrower; or (3) make any
other distribution of any Property or cash to stockholders as such.
Notwithstanding the foregoing, Borrower may make contributions of its
capital stock into a 401(k) program for its employees established to
replace its existing ESOP program in order to meet matching requirements
on employee contributions so long the value of the capital stock so
contributed does not exceed $175,000, in the aggregate, and does not
exceed 5% of employee contributions. The terms and conditions of any such
401(k) program shall be subject to the prior written approval of Lender.
(l) EXHIBITS A and B to the Loan Agreement are hereby amended to be
identical to EXHIBITS A and B attached hereto.
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SECTION 3. LIMITATIONS. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Loan Agreement or any of
the other Credit Documents, or (b) except as expressly set forth herein,
prejudice any right or rights which the Lender may now have or may have in the
future under or in connection with the Loan Agreement, the Credit Documents or
any of the other documents referred to therein. Except as expressly modified
hereby or by express written amendments thereof, the terms and provisions of the
Loan Agreement, the Notes, and any other Credit Documents or any other documents
or instruments executed in connection with any of the foregoing are and shall
remain in full force and effect. In the event of a conflict between this
Amendment and any of the foregoing documents, the terms of this Amendment shall
be controlling. The representations and warranties made in each Credit Document
are true and correct in all material respects on and as of the Amendment
Effective Date.
SECTION 4. PAYMENT OF EXPENSES. The Borrower agrees, whether or not the
transactions hereby contemplated shall be consummated, to reimburse and save the
Lender harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this Amendment,
including, without limitation, the reasonable fees and expenses of any local or
other counsel for the Lender, and all stamp taxes (including interest and
penalties, if any), recording taxes and fees, filing taxes and fees, and other
charges which may be payable in respect of, or in respect of any modification
of, the Loan Agreement and the other Credit Documents. The provisions of this
Section shall survive the termination of the Loan Agreement and the repayment of
the Loans.
SECTION 5. GOVERNING LAW. This Amendment and the rights and obligations of
the parties hereunder and under the Loan Agreement shall be construed in
accordance with and be governed by the laws of the State of Texas and the United
States of America.
SECTION 6. DESCRIPTIVE HEADINGS, ETC. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
SECTION 7. ENTIRE AGREEMENT. This Amendment and the documents referred to
herein represent the entire understanding of the parties hereto regarding the
subject matter hereof and supersede all prior and contemporaneous oral and
written agreements of the parties hereto with respect to the subject matter
hereof, including, without limitation, any commitment letters regarding the
transactions contemplated by this Amendment.
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts and all of such
counterparts shall together constitute one and the same instrument.
SECTION 9. AMENDED DEFINITIONS. As used in the Loan Agreement (including
all Exhibits thereto) and all other instruments and documents executed in
connection therewith, on and subsequent to the Amendment Effective Date the term
(i) "Agreement" shall mean the Loan Agreement as amended
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by this Amendment, and (ii) references to any and all other Credit Documents
shall mean such documents as amended as contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized offices as of
the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER CREDIT DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND 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.
Exhibit A - Request for Credit
Exhibit B - Borrowing Base Certificate
▇▇▇▇▇ SYSTEMS, INC.,
a Texas corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
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TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association
By: _______________________________
Name: _____________________________
Title: ____________________________
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The undersigned hereby join in the execution of this Amendment to evidence
their consent hereto and its acknowledgment that the Credit Documents executed
by the undersigned shall continue to apply to the Loan Agreement, as amended
hereby.
CHEM-WAY SYSTEMS, INC.,
a Texas corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
WAY ENERGY SYSTEMS, INC.,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
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REQUEST FOR CREDIT
______________, 199___
Texas Commerce Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Franchise and Trademark
Finance Division
Gentlemen:
The undersigned hereby certifies that [he] [she] is the
_________________________________ of ▇▇▇▇▇ SYSTEMS, INC., a Texas corporation
("BORROWER"), and that as such is authorized to execute this Request for Credit
(the "REQUEST") on behalf of Borrower pursuant to the Loan Agreement (as it may
be amended, supplemented or restated from time to time, the "LOAN AGREEMENT")
dated as of August ____, 1996, by and between Borrower and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION. The (check one) Loan Letter of Credit being requested
hereby is to be in the amount set forth in (b) below and is requested to be made
or issued, as the case may be on __________, 199___, which is a Business Day. On
behalf of Borrower, the undersigned further certifies, represents and warrants
as follows (each capitalized term used herein having the same meaning given to
it in the Loan Agreement unless otherwise specified herein):
a. As of the date hereof:
(1) The current Borrowing Base is: $__________
(2) Aggregate outstanding amount
of Loans is: $__________
(3) Aggregate face amount of all outstanding
Letters of Credit $__________
(4) The available Commitment [the amount by which
the lesser of (x) the amount in (a)(1) above
or (y) $10,200,000 EXCEEDS the sum of the
amounts in (a)(2) and (a)(3) above],
if positive, is: $__________
EXHIBIT A
b. If and only if the available Commitment is positive, Borrower hereby
requests under this Request a (check one) ____ Loan ____ Letter of
Credit in the amount of $____________ (which is no more than the
available Commitment).
c. The representations and warranties made in each Credit Document are
true and correct in all respects on and as of the time of delivery
hereof, with the same force and effect as if made on and as of the
time of delivery hereof.
d. No Default has occurred and is continuing or will occur as a result
of the requested Loan or Letter of Credit, as the case may be.
e. If a Loan is being requested, it is to be used for the benefit of
(check one) ____ Borrower ____ ChemWay _____ Way Energy. After
giving effect to the requested Loan, (i) the aggregate unpaid
principal amount of all Loans will not exceed $8,700,000, (ii) the
aggregate unpaid principal amount of all Loans used for the benefit
of Borrower will not exceed $2,200,000, (iii) the aggregate unpaid
principal amount of all Loans used for the benefit of ChemWay will
not exceed $6,000,000 and (iv) the aggregate unpaid principal amount
of all Loans used for the benefit of Way Energy will not exceed
$500,000.
f. If a Letter of Credit is being requested, attached hereto is all
pertinent information relating to the issuance of the requested
Letter of Credit, including the name of the beneficiary to be
designated, the proposed expiration date and any special conditions
to drawings to be included in the Letter of Credit. After giving
effect to the requested Letter of Credit, the aggregate undrawn
amount under all Letters of Credit will not exceed $1,500,000.
Thank you for your attention to this matter.
Very truly yours,
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING REQUEST]
EXHIBIT A
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that [he] [she] is the
__________________________________ of ▇▇▇▇▇ SYSTEMS, INC., a Texas corporation
("BORROWER"), and that as such is authorized to execute this Borrowing Base
Certificate on behalf of Borrower pursuant to the Loan Agreement (as it may be
amended, supplemented or restated from time to time, the "LOAN AGREEMENT") dated
August _____, 1996 by and between Borrower and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION. On behalf of Borrower, the undersigned further certifies,
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Loan Agreement unless otherwise specified
herein):
(1) As of ____________, 199___, the components of the Borrowing Base are
as follows:
(a) Eligible Accounts of Borrower: $____________
(b) Eligible Accounts of ChemWay: $____________
(c) Eligible Accounts of Way Energy: $____________
(d) Eligible Inventory of Borrower: $____________
(e) Eligible Inventory of ChemWay: $____________
(f) Eligible Inventory of Way Energy: $____________
(2) The Borrowing Base determined on the basis of the above information is
equal to the sum of 75%% of LINE (A) above plus 75% of LINE (B) above plus
75% of LINE (C) above plus 25% of LINE (D) above plus 50% of LINE (E)
above plus 25% of LINE (F) above; or $________________.
(3) The Eligible Accounts and the Eligible Inventory of Borrower and
Borrower's Subsidiaries are calculated in accordance with the Loan
Agreement and the schedule(s), if any, attached hereto.
(4) The current aggregate outstanding amount of Loans is $______________
and the aggregate face amount of all outstanding Letters of Credit is
$_______________ (the sum of the foregoing is $______________). IF THE
AMOUNT BY WHICH THE LESSER OF (X) THE CURRENT BORROWING BASE OR (Y)
$10,200,000 EXCEEDS THE SUM OF THE CURRENT AGGREGATE OUTSTANDING AMOUNT OF
LOANS AND THE AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT,
BORROWER MUST MAKE A PREPAYMENT ON THE LOANS (OR PROVIDE COVER FOR LETTER
OF CREDIT LIABILITIES) IN THE AMOUNT OF THE DIFFERENCE.
EXHIBIT B
Dated ____________, 199___.
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING
CERTIFICATE]
EXHIBIT B
