1
EXHIBIT 10.3
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT
[DXP Acquisition, Inc., d/b/a Strategic Acquisition, Inc.]
THIS AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made and entered into this 13th day of August, 1999, to be
effective as of the respective date herein indicated, by and between DXP
ACQUISITION, INC., D/B/A STRATEGIC ACQUISITION, INC., a Nevada corporation
("Borrower") and FLEET CAPITAL CORPORATION, a Rhode Island corporation
("Lender").
RECITALS
A. Borrower and Lender have entered into that certain Loan and Security
Agreement, dated as of June 16, 1997 (as amended, the "Loan Agreement").
B. Borrower and Lender desire to amend the Loan Agreement and the other
Loan Documents as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
Effective as of the respective date herein indicated, the Loan
Agreement is hereby amended as follows:
2.01 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT AND
RESTATEMENT OF THE DEFINITION "DOMESTIC MARGIN". Effective as of the date of
execution of this Amendment, the definition of "Domestic Margin" contained in
Section 1.1 of the Loan Agreement is amended and restated to read in its
entirety as follows:
"Domestic Margin - shall mean 0.50% per annum".
2.02 AMENDMENT TO SECTION 3.3(A). Effective as of the date of execution
of this Amendment, Section 3.3(A) of the Loan Agreement is hereby amended by
deleting therefrom the reference to the date "April 1, 2000" and substituting
therefor the date "April 1, 2001."
2.03 AMENDMENT TO SECTION 9.3(E). Effective as of the date of execution
of this Amendment, Section 9.3(E) of the Loan Agreement is amended and restated
to read in its entirety as follows:
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT - Page 1
- ----------------------------------------------------
2
"(E) Maintain average Availability on a consolidated basis of
not less than $1,000,000. For purposes of meeting this requirement, up
to $1,000,000 of the Borrowing Base which is in excess of the combined
Commitments of DXP Acquisition, Inc., Pelican State Supply Company,
Inc., Sepco Industries, Inc., Bayou Pumps, Inc. and American MRO, Inc.
can be used to meet this average Availability requirement."
ARTICLE III
LIMITED WAIVER
3.01 Borrower has informed Lender that Borrower has violated the
following covenants contained in the Loan Agreement and has requested that
Lender waive such violations: (i) Parent and its Subsidiaries failed to
maintain, for the twelve calendar month period ending on June 30, 1999, a Fixed
Charge Ratio of not less than the relevant ratio provided for in Section 9.3(A)
of the Loan Agreement; (ii) Parent and its Subsidiaries failed to achieve, for
the twelve calendar month period ending on June 30, 1999, a Senior Interest
Coverage Ratio at least equal to the ratio set forth in Section 9.3(B) of the
Loan Agreement; (iii) Parent and its Subsidiaries failed to maintain, as of June
30, 1999, the ratio of (a) Senior Debt of Parent and its Subsidiaries on such
date to (b) an amount equal to (x) the EBITDA of Parent and its Subsidiaries for
the twelve calendar month period ending on such date, minus (y) Capital
Expenditures made by Parent and its Subsidiaries during such period, of not
greater than the ratio set forth in Section 9.3(C) of the Loan Agreement; and
(iv) Parent and its Subsidiaries failed to maintain as of the end of the fiscal
month ending April 30, 1999, the fiscal month ending May 31, 1999, and the
fiscal month ending June 30, 1999, a Fixed Charge Ratio of not less than the
relevant ratio provided for in Section 9.3(D) of the Loan Agreement. Subject to
the satisfaction of the conditions precedent set forth in Section 4.01 of this
Amendment and to the other terms, conditions and provisions of this Amendment,
Lender hereby waives each of the above-described violations of the
above-described Sections of the Loan Agreement; provided, however, that the
waiver described in this Section 3.01 of this Amendment is strictly limited to
the Sections of the Loan Agreement described above and to the specific
occurrences described above. Except as otherwise specifically provided for in
this Amendment, nothing contained herein shall be construed as a waiver by
Lender of any covenant or provision of the Loan Agreement, the other Loan
Documents, this Amendment or of any other contract or instrument between
Borrower and Lender, and the failure of Lender at any time or times hereafter to
require strict performance by Borrower of any provision thereof shall not waive,
affect or diminish any right of Lender to thereafter demand strict compliance
therewith. Lender hereby reserves all rights granted under the Loan Agreement,
the other Loan Documents, this Amendment and any other contract or instrument
between Borrower and Lender.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent in a manner
satisfactory to Lender, unless specifically waived in writing by Lender:
(a) Lender shall have received each of the following, each in
form and substance satisfactory to Lender, in its sole discretion, and,
where applicable, each duly executed by each party thereto, other than
Lender:
(i) This Amendment, duly executed by Lender, together
with the relevant Consent, Ratification, and Amendment,
respectively duly executed by Sepco Industries, Inc., Bayou
Pumps, Inc., American MRO, Inc., Pelican State Supply Company,
Inc. and DXP Enterprises, Inc.; and
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT - Page 2
- ----------------------------------------------------
3
(ii) All other documents Lender may request with
respect to any matter relevant to this Amendment or the
transactions contemplated hereby;
(b) The representations and warranties contained herein and in
the Loan Agreement and the other Loan Documents, as each is amended
hereby, shall be true and correct as of the date hereof, as if made on
the date hereof;
(c) No Default or Event of Default shall have occurred and be
continuing, unless such Default or Event of Default has been otherwise
specifically waived in writing by Lender; and
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel.
ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
5.01 RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. Each Borrower and Lender agree that the
Loan Agreement and the other Loan Documents, as amended hereby, shall continue
to be legal, valid, binding and enforceable in accordance with their respective
terms.
5.02 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lender that (a) 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; (b) attached hereto as Annex A is a true, correct and
complete copy of presently effective resolutions of Borrower's Board of
Directors authorizing the execution, delivery and performance of this Amendment
and any and all other Loan Documents executed and/or delivered in connection
herewith, certified by the Assistant Secretary of Borrower; (c) the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Documents are true and correct on and as of the date
hereof and on and as of the date of execution hereof as though made on and as of
each such date; (d) no Default or Event of Default under the Loan Agreement, as
amended hereby, has occurred and is continuing, unless such Default or Event of
Default has been specifically waived in writing by Lender; (e) Borrower is in
full compliance with all covenants and agreements contained in the Loan
Agreement and the other Loan Documents, as amended hereby; and (f) Borrower has
not amended its Articles of Incorporation or its Bylaws since the date of the
Loan Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Loan Agreement or any other Loan Documents,
including, without limitation, any 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
the representations and warranties or the right of Lender to rely upon them.
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT - Page 3
- ----------------------------------------------------
4
6.02 REFERENCE TO LOAN AGREEMENT. Each of the Loan Agreement and the
other Loan Documents, and any and all other Loan Documents, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement, as amended hereby, are hereby
amended so that any reference in the Loan Agreement and such other Loan
Documents to the Loan Agreement shall mean a reference to the Loan Agreement as
amended hereby.
6.03 EXPENSES OF LENDER. As provided in the Loan Agreement, 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 and any and all amendments,
modifications, and supplements thereto, 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 Documents, including,
without, limitation, the costs and fees of Lender's legal counsel.
6.04 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
6.06 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
6.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant or condition by
Borrower shall be deemed a consent to or waiver of any other breach of the same
or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT - Page 4
- ----------------------------------------------------
5
6.11 RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, 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 ASSIGNS, IF
ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS",
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR
OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BORROWER"
DXP ACQUISITION, INC.,
D/B/A STRATEGIC ACQUISITION, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
"LENDER"
FLEET CAPITAL CORPORATION
By: /s/ HANCE VANBEBER
-------------------------------------
Name: Hance VanBeber
-------------------------------------
Title: Senior Vice President
-------------------------------------
ANNEXES:
A-1 - Certified Resolutions of DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc.
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY AGREEMENT - Page 5
- ----------------------------------------------------
6
ANNEX A-1
CERTIFIED RESOLUTIONS OF
DXP ACQUISITION, INC.,
D/B/A STRATEGIC ACQUISITION, INC.'S BOARD OF DIRECTORS
RESOLVED: That any officer of DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc., a Nevada corporation (the "Corporation"), acting alone, by
his signature be, and the same hereby is, authorized and directed, in the name
of and on behalf of the Corporation (a) to amend the Corporation's existing Loan
and Security Agreement by and between the Corporation and Fleet Capital
Corporation, a Rhode Island corporation ("Lender"), (b) to execute and deliver
to Lender with such changes in the terms and provisions thereof as the officer
executing same shall, in his sole discretion, deem advisable, (i) a certain
proposed August 1999 Amendment to Loan and Security Agreement to be executed by
Corporation and Lender, a draft of which has been reviewed and discussed by the
Board of Directors of the Corporation, and (ii) such other Loan Documents,
instruments, statements and writings as the officer or officers executing the
same may deem desirable or necessary in connection therewith, and (c) to perform
such other acts as the officer or officers performing such acts on behalf of the
Corporation may deem desirable or necessary in connection therewith; and be it
FURTHER RESOLVED: That said agreements will benefit the Corporation,
both directly and indirectly, and are in the best interests of the Corporation;
and be it
FURTHER RESOLVED: That said agreements and other statements in writing
executed in the name and on behalf of the Corporation by any officer of the
Corporation shall be presumed conclusively to be the instruments, the execution
of which is authorized by these resolutions; and be it
FURTHER RESOLVED: That the officers of the Corporation be, and the same
hereby are, authorized and directed to execute, in the name of and on behalf of
the Corporation, security agreements, financing statements, assignments,
collateral reports, loan statements, confirmations of delivery, lien statements,
pledge certificates, release certificates, removal reports, guaranties, cross-
collateralization agreements and such other writings and to take such other
actions as are necessary in their dealings with Lender, and any such papers
executed and any such actions taken by any of them prior to this time are
approved, ratified and confirmed; and be it
FURTHER RESOLVED: That the Secretary or any Assistant Secretary of the
Corporation, by the signature of any one or more of them, be, and the same
hereby are, authorized and directed to attest the execution by the Corporation
of the papers signed pursuant to these resolutions, to affix the seal of the
Corporation thereto, if required by Lender, and to certify to Lender the
adoption of these resolutions.
CERTIFICATION
The undersigned hereby certifies that the within and foregoing
resolutions are in effect as of the date hereof, without modification, and that
the person signing the within and foregoing Amendment on behalf of the
Corporation is the duly elected officer stated below his name, that he is
authorized to sign such Amendment, and that his signature thereon is genuine.
DATED: August ____, 1999.
----------------------------------------
[Assistant] Secretary of the Corporation
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 1
- ------------------------------------------
7
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, SEPCO INDUSTRIES, INC., has executed that certain
Continuing Guaranty Agreement, dated June 16, 1997 (the "Guaranty"), in favor of
FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Loan and Security Agreement, dated on or about the date hereof (the
"Loan Amendment"), by and between DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc., a Nevada corporation, and Lender, a copy of which has been
reviewed by the undersigned, and (ii) agrees that the Guaranty shall remain in
full force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations" as such term is used
in the Guaranty, (b) the Guaranty is an "Other Agreement", as such term is
defined in the Loan Agreement, (c) the Guaranty is not as of this date subject
to any claims, defenses or offsets, (d) nothing contained in the Loan Agreement
or any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: August 13, 1999.
SEPCO INDUSTRIES, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 2
- ------------------------------------------
8
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, AMERICAN MRO, INC., has executed that certain
Continuing Guaranty Agreement, dated June 16, 1997 (the "Guaranty"), in favor of
FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Loan and Security Agreement, dated on or about the date hereof (the
"Loan Amendment"), by and between DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc., a Nevada corporation, and Lender, a copy of which has been
reviewed by the undersigned, and (ii) agrees that the Guaranty shall remain in
full force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations" as such term is used
in the Guaranty, (b) the Guaranty is an "Other Agreement", as such term is
defined in the Loan Agreement, (c) the Guaranty is not as of this date subject
to any claims, defenses or offsets, (d) nothing contained in the Loan Agreement
or any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: August 13, 1999.
AMERICAN MRO, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 3
- ------------------------------------------
9
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, BAYOU PUMPS, INC., has executed that certain
Continuing Guaranty Agreement, dated June 16, 1997 (the "Guaranty"), in favor of
FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Loan and Security Agreement, dated on or about the date hereof (the
"Loan Amendment"), by and between DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc., a Nevada corporation, and Lender, a copy of which has been
reviewed by the undersigned, and (ii) agrees that the Guaranty shall remain in
full force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations" as such term is used
in the Guaranty, (b) the Guaranty is an "Other Agreement", as such term is
defined in the Loan Agreement, (c) the Guaranty is not as of this date subject
to any claims, defenses or offsets, (d) nothing contained in the Loan Agreement
or any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: August 13, 1999.
BAYOU PUMPS, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 4
- ------------------------------------------
10
CONSENT, RATIFICATION, AND AMENDMENT
The undersigned, PELICAN STATE SUPPLY COMPANY, INC., has executed that
certain Continuing Guaranty Agreement, dated June 16, 1997 (the "Guaranty"), in
favor of FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"). The
undersigned hereby (i) consents and agrees to the terms of the August 1999
Amendment to Loan and Security Agreement, dated on or about the date hereof (the
"Loan Amendment"), by and between DXP Acquisition, Inc., d/b/a Strategic
Acquisition, Inc., a Nevada corporation, and Lender, a copy of which has been
reviewed by the undersigned, and (ii) agrees that the Guaranty shall remain in
full force and effect and shall continue to be the legal, valid and binding
obligation of the undersigned enforceable against it in accordance with its
terms. Furthermore, the undersigned hereby agrees and acknowledges that (a) the
obligations, indebtedness and liabilities arising in connection with the Loan
Amendment comprise some, but not all, of the "Obligations" as such term is used
in the Guaranty, (b) the Guaranty is an "Other Agreement", as such term is
defined in the Loan Agreement, (c) the Guaranty is not as of this date subject
to any claims, defenses or offsets, (d) nothing contained in the Loan Agreement
or any Other Agreement entered into prior to or as of the date hereof shall
adversely affect any right or remedy of Lender under the Guaranty, and (e) the
execution and delivery of the Loan Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantor pursuant to the
Guaranty and shall not constitute a waiver by Lender of any of Lender's rights
against the undersigned.
Dated: August 13, 1999.
PELICAN STATE SUPPLY COMPANY, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 5
- ------------------------------------------
11
CONSENT, RATIFICATION AND AMENDMENT
The undersigned, DXP ENTERPRISES, INC., has executed (x) that certain
Continuing Guaranty Agreement, dated June 16, 1997 (the "Guaranty"), in favor of
FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Lender"), and (y) that
certain Stock Pledge Agreement, dated as of June 16, 1997, executed by the
undersigned and Fleet (the "Security Agreement"). The undersigned hereby (i)
consents and agrees to the terms of the August 1999 Amendment to Loan and
Security Agreement, dated on or about the date hereof (the "Loan Amendment"), by
and between DXP Acquisition, Inc., d/b/a Strategic Acquisition, Inc., a Nevada
corporation, and Lender, a copy of which has been reviewed by the undersigned,
and (ii) agrees that each of the Guaranty and the Security Agreement shall
remain in full force and effect and shall continue to be the legal, valid and
binding obligation of the undersigned, enforceable against it in accordance with
its terms. Furthermore, the undersigned hereby agrees and acknowledges that (a)
the obligations, indebtedness and liabilities arising in connection with the
Loan Amendment comprise some, but not all, of the "Obligations", as such term is
used in the Guaranty, and some, but not all, of the "Secured Obligations", as
such term is used in the Security Agreement, (b) each of the Guaranty and the
Security Agreement is an "Other Agreement", as such term is defined in the Loan
Agreement, (c) neither the Guaranty nor the Security Agreement is, as of the
date hereof, subject to any claims, defenses or offsets, (d) nothing contained
in the Loan Agreement or any Other Agreement entered into prior to or as of the
date hereof shall adversely affect any right or remedy of Lender under the
Guaranty or under the Security Agreement, and (e) the execution and delivery of
the Loan Amendment shall in no way reduce, impair or discharge any obligations
of the undersigned as guarantor pursuant to the Guaranty or as debtor pursuant
to the Security Agreement and shall not constitute a waiver by Lender of any of
Lender's rights against the undersigned.
Dated: August 13, 1999.
DXP ENTERPRISES, INC.
By: /s/ GARY A. ALLCORN
-------------------------------------
Name: Gary A. Allcorn
-------------------------------------
Title: Senior Vice President/Finance
-------------------------------------
CONSENT AND RATIFICATION TO
- ---------------------------
AUGUST 1999 AMENDMENT TO LOAN AND SECURITY - Page 6
- ------------------------------------------