EXHIBIT 10.1
EIGHTH AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AGREEMENT AND FORBEARANCE
AGREEMENT
THIS EIGHTH AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AGREEMENT AND FORBEARANCE AGREEMENT (this "
Amendment ") is dated April 30, 2009, but effective
for all purposes as of the Effective Date (defined below), and
entered into between TOR Minerals International, Inc., a Delaware
corporation (" Borrower "), and BANK OF AMERICA,
N.A., a national banking association (" Lender
"). Capitalized terms used but not defined in this Amendment
have the meaning given them in the Loan Agreement (defined
below).
RECITALS
A.
Borrower and Lender entered into that certain Second Amended and
Restated Loan Agreement dated as of December 21, 2004 (as amended
by First Amendment dated December 13, 2005, Second Amendment dated
November 29, 2006, Third Amendment dated February 15, 2007, Fourth
Amendment dated May 7, 2007, Fifth Amendment dated March 19, 2008,
Waiver and Sixth Amendment dated August 14, 2008, Waiver and
Seventh Amendment dated November 14, 2008, and as further amended,
restated or supplemented the " Loan Agreement
").
B.
Events of Default under the Loan Agreement have occurred as a
result of Borrower's failure to comply with (i) the Fixed Charge
Coverage Ratio covenant contained in Section 4.B(iii)
of the Loan Agreement for the period ending December 31, 2008, and
(ii) the Funded Debt to EBITDA Ratio covenant contained in
Section 4.B(v) of the Loan Agreement for the period
ending December 31, 2008 (collectively, the " Existing
Defaults ").
C.
Lender has the present right, pursuant to the Loan Agreement, to
take such remedial action provided therein and under applicable
law, including without limitation, to declare the Loans to be
immediately due and payable, to collect the Loans, to foreclose
upon the collateral held pursuant to the Loan Documents, and to
exercise any and all legal rights and remedies available to it
under the Loan Documents or applicable law.
D.
Borrower has requested that Lender forbear from the exercise of its
rights and remedies in respect of the Existing Defaults.
E.
The forbearance by Lender from the current exercise of its rights
and remedies as provided for in this Amendment will result in a
direct tangible and intangible benefit to Borrower.
F.
On or about May 1, 2009, Borrower intends to issue an aggregate
principal amount of $1,000,000 of its 6% Convertible Subordinated
Debentures due 2016 (the " Debentures ") to Paulson
Ranch, Ltd., David A. Hartman, as trustee of The D and CH Trust,
and Douglas H. Hartman, as trustee of The Douglas MacDonald Hartman
Family Irrevocable Trust.
G.
Borrower and Lender have agreed to amend the Loan Agreement,
subject to the terms and conditions of this Amendment.
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the undersigned hereby agree as follows:
1.
Amendments to Loan Agreement .
(a) Section 1.H of the
Loan
Agreement
(Funded Debt to EBITDA Ratio) is deleted in its entirety and
replaced with "[Intentionally Omitted.]"
(b) The Loan Agreement is
amended to extend the maturity date of Revolving Note to October 1,
2009, by deleting the first sentence of Section 2.A and
replacing it with the following:
"Lender agrees to establish a revolving line of
credit for Loans to be made to Borrower, which shall be evidenced
by the promissory note maturing October 1, 2009 (or earlier if
Lender's commitment to make Loans under the Revolving Note is
otherwise cancelled or terminated in accordance with Section
7 of this Agreement or otherwise), which is substantially in
the form attached as Exhibit A-1 , to which reference is
made for all purposes (the " Revolving Note ").
(c)
The Loan Agreement is amended to modify the maturity date of the
Term Note to October 1, 2009, by deleting the first sentence of
Section 2.F and replacing it with the following:
"On or about May 7, 2007, Lender made a single
advance term loan to Borrower in the amount of $500,000 (the "
Term Loan "), which was evidenced by that certain
promissory note dated May 7, 2007, maturing May 1, 2012 (the "
Initial Term Note "), which was replaced by that
certain promissory note dated August 14, 2008, maturing May 1,
2012, with an outstanding principal amount of $308,333 as of April
1, 2009 (the " Second Term Note "), which has been
replaced by that certain promissory note executed by Borrower dated
April 30, 2009, maturing October 1, 2009 or earlier if accelerated
under the terms of this Agreement, which promissory note is
substantially in the form attached as Exhibit A-2 ,
to which reference is hereby made for all purposes (which
promissory note is given in replacement for (but not a novation of)
the Initial Term Note and the Second Term Note, the " Term
Note ").
(d)
The Loan Agreement is amended to modify the maturity date of the
Real Estate Term Note to October 1, 2009, by deleting Section
2.K in its entirety and replacing it with the
following:
" K.
On or about December 13, 2005, Lender made a single advance term
loan to Borrower in the amount of $1,029,000.00 (the " Real
Estate Term Loan "), which was evidenced by that certain
promissory note dated December 13, 2005, maturing November 30, 2010
(the " Initial Real Estate Term Note "), which was
replaced by that certain promissory note executed by Borrower dated
August 14, 2008, maturing November 30, 2010, with an outstanding
principal amount of $539,000 as of April 1, 2009 (the "
Second Real Estate Term Note "), which has been
replaced by that certain promissory note executed by Borrower dated
April 30, 2009, maturing October 1, 2009 or earlier if accelerated
under the terms of this Agreement, which promissory note is
substantially in the form attached as Exhibit A-3 ,
to which reference is hereby made for all purposes (such promissory
note is given in replacement for (but not a novation of) the
Initial Real Estate Term Note and the Second Real Estate Term Note,
the " Real Estate Term Note ").
(e)
The Loan Agreement is amended to delete Section 4.B(ii) and
replace it with the following:
"
ii. Current Ratio.
Borrower agrees to maintain a ratio of current assets of its
operations in the United States to current liabilities attributable
to its operations in the United States (including the outstanding
principal balance of the Revolving Note) of at least 1.00 to 1.00
as of the fiscal quarter ended June 30, 2009."
(f)
The Loan Agreement is amended delete Section 4.B(iii) in its
entirety and to replace such clause (iii) with the
following:
" iii. Fixed Charge Coverage Ratio
. Borrower agrees to maintain a Fixed Charge Coverage Ratio
of at least 0.85 to 1.00. " Fixed Charged Coverage
Ratio " means the ratio of (a) the sum of EBITDA
minus the sum of taxes, dividends, and maintenance
capital expenditures, to (b) the sum of interest expense,
the current portion of long term debt (excluding any balloon
principal payment due to Lender on October 1, 2009), and the
current portion of capitalized lease obligations, in each case
attributable to its operations in the United States. "
EBITDA " means net income from Borrower's operations
in the United States, less income or plus loss from
discontinued operations and extraordinary items, plus income
taxes, plus interest expense, plus depreciation,
depletion and amortization, and plus non-cash charges. This
ratio will be calculated using the results of Borrower's operations
in the United States for the three-month period ended June 30,
2009."
(g)
The Loan Agreement is amended to delete Section 4.B(v) in
its entirety and replace it with the following:
" v.
[Intentionally
Deleted.]"
(h)
The Loan Agreement is amended to delete Section 4.C(ii) in
its entirety and replace it with the following:
"
ii. Periodic Financial
Statements. Borrower agrees to furnish Lender with a
copy of its internally prepared monthly financial statements,
certified and dated by an authorized financial officer of Borrower,
within 15 days after the end of each calendar month, which
financial statements shall include (a) a balance sheet as of the
end of the calendar month, (b) a profit and loss statement
reflecting Borrower's operations during the calendar month, (c) a
summary of the inventory in Borrower's possession at the end of the
calendar month, priced at the lower of cost or market, and (d) an
aged list of accounts receivable owed to Borrower at the end of the
calendar month. The statements shall be prepared on a
consolidated and consolidating basis."
2.
Forbearance.
(a)
Borrower hereby acknowledges and
agrees that each of the Existing Defaults exists and is continuing
without timely cure by Borrower and Borrower further agrees that
but for the forbearance of Lender set forth below, Lender would be
entitled to pursue its remedies for the enforcement of Borrower's
obligations unde
