EXHIBIT 10.53
FIRST AMENDMENT
TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(the "Amendment") is dated as of March 12, 1998, and entered into by and between
BANKAMERICA BUSINESS CREDIT, INC. ("Lender") and CLIMATE MASTER, INC. ("Climate
Master"), INTERNATIONAL ENVIRONMENTAL CORPORATION ("IEC"), EL DORADO CHEMICAL
CORPORATION ("EDC") and SLURRY EXPLOSIVE CORPORATION ("Slurry") ("Climate, IEC,
EDC, and Slurry being collectively referred to herein as "Borrower").
WHEREAS, Lender and Borrower have entered into that certain Loan and
Security Agreement dated as of November 21, 1997 (the "Agreement");
WHEREAS, certain Events of Default have occurred under the Agreement;
WHEREAS, the Borrower desires that the Lender waive the Events of Default
and amend the Agreement in certain respects; and
WHEREAS, the Lender is willing to waive the Events of Default and to amend
the Agreement subject to the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
---------
Definitions
-----------
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
-----------
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
Section 1.02. New Definition. A new definition is added to Section 1.1 of
--------------
the Agreement and reads as follows:
"CCI Special Dividend' has the meaning specified in Section 9.14."
-------------------- ------------
ARTICLE II
----------
Amendments
----------
Section 2.01. Amendment to Definition of "CCI Adjusted Tangible Net Worth."
-----------------------------------------------------------
The definition of "CCI Adjusted Tangible Net Worth" contained in Section 1.1 of
the Agreement is hereby amended in its entirety to read as follows:
"CCI Adjusted Tangible Net Worth" means, at any date: (a) the book
-------------------------------
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with GAAP)
at which the CCI Adjusted Tangible Assets would be shown on a consolidated
balance sheet of the CCI Consolidated Group at such date prepared in
accordance with GAAP plus the CCI Special Dividend less (b) the amount at
---- ----
which the CCI Consolidated Group's liabilities, including all deferred tax
liabilities, would be shown on such balance sheet prepared in accordance
with GAAP.
Section 2.01. Amendment to Definition of "Swap Transaction Reserves." The
-----------------------------------------------------
definition of "Swap Transaction Reserves" contained in Section 1.1 of the
Agreement is hereby amended in its entirety to read as follows:
"Swap Transaction Reserves" means all reserves which the Lender from
-------------------------
time to time establishes for amounts that are liabilities owed by EDC to
the Bank and for which Lender has agreed to indemnify the Bank. As of
March 10, 1998, the amount of the Swap Transaction Reserves is $5,000,000.
Section 2.03. Amendment to Section 9.14. Section 9.14 of the Agreement is
-------------------------
hereby amended to read in its entirety as follows:
"9.14. Distributions and Restricted Investments. Borrower shall not
----------------------------------------
(a) directly or indirectly declare or make, or incur any liability to make,
any Distribution, or (b) make any Restricted Investments, except: (i)
Borrower may make and receive Distributions and Restricted Investments to
and from CCI, the other CCI Borrower Subsidiaries, the CCI Guarantor
Subsidiaries, and all other members of the LSB Consolidated Borrower Group;
(ii) in addition to (i) above, each Borrower may make Restricted
Investments to any subsidiary of LSB other than to CCI and the members of
the LSB Consolidated Borrowing Group, provided, however, that (other than
Restricted Investments permitted under section (i) above to CCI and the
members of the LSB Consolidated Borrower Group) the sum of all such
Restricted Investments from each such Borrower and all other members of the
LSB Consolidated Borrowing Group shall not exceed $200,000 in the aggregate
per annu7m; (iii) each Borrower may make Restricted Investments in
Affiliates outstanding as of the date hereof, and (iv) each Borrower may
-2-
make other Restricted Investments constituting Acquisitions not otherwise
permitted above in this Section as long as such Restricted Investments when
aggregated with all other Restricted Investments for the same Acquisition
from all members of the LSB Borrowing Group do not exceed $2,000,000 in
cash investments and issued and/or assumed interest-bearing debt per
Acquisition and $10,000,000 in cash investments and issued and/or assumed
interest-bearing debt in the aggregate for all such Acquisitions per annum;
provided, however, that interest-bearing debt of the acquired company which
Lender in its sole and absolute discretion agrees to refinance as a working
capital facility shall not be included in the $2,000,000 and the
$10,000,000 limitations; and further provided that nothing in this
subsection (iv) shall be construed to imply Lender's willingness to advance
to provide any such refinancing, and (v) CCI may make the Distributions
described on Schedule 10.8. In addition to the foregoing, CCI may make
Distributions to LSB (referred to herein as the "CCI Special Dividend") in
an amount not to exceed on an annual basis fifty percent (50%) of CCI's net
income plus the tax liability of LSB solely attributable to CCI.
Notwithstanding any provision to the contrary contained herein, the Account
currently owing to EDC by its Affiliate, TES, may be converted to preferred
stock to be owned and controlled by EDC."
Section 2.04. Amendment to Section 9.16. Section 9.16 of the Agreement is
-------------------------
hereby amended to read in its entirety as follows:
"9.16. CCI Adjusted Tangible Net Worth. The CCI Adjusted Tangible Net
-------------------------------
Worth will not be less than the following amounts at the end of each of the
---------
Fiscal Quarters during the following Fiscal Years:
Fiscal Quarters in the
Following Fiscal Years 0/xx/ Xxxxxxx 0/xx/ Xxxxxxx 0/xx/ Xxxxxxx 4/th/ Quarter
---------------------- ------------- ------------- ------------- -------------
Fiscal Year Ending
December 31, 1998 $18,000,000 $21,500,000 $24,500,000 $26,500,000
First Fiscal Quarter
during Fiscal Year
Ending December 31,
1999 The CCI Adjusted Tangible Net Worth as of December 31,
1998, less $1,500,000.
----
Second Fiscal Quarter
During Fiscal Year
Ending December 31,
1999 The CCI Adjusted Tangible Net Worth as of March 31,
1999.
-3-
Third Fiscal Quarter
During Fiscal Year
Ending December 31,
1999, and each
Fiscal Quarter during
each Fiscal Year
ending thereafter The CCI Adjusted Tangible Net Worth as of March 31,
19999, plus fifty percent (50%) of CCI's profits for
the prior fiscal quarter without taking into account
any losses."
Section 2.05. Amendment to Section 9.17. Section 9.17 of the Agreement is
-------------------------
hereby amended to read in its entirety as follows:
"9.17. Debt Ratio. The ratio of Debt of the CCI Consolidated Group to
----------
the CCI Adjusted Tangible Net Worth will not be greater than the following
ratios at the end of each of the Fiscal Quarters during the following
Fiscal Years:
Fiscal Quarters in the
Following Fiscal Years 0/xx/ Xxxxxxx 0/xx/ Xxxxxxx 0/xx/ Xxxxxxx 4/th/ Quarter
---------------------- ------------- ------------- ------------- -------------
Fiscal Year Ending
December 31, 1998 8.50:1 7.10:1 6.00:1 5.60:1
Fiscal Year Ending
December 31, 1999 and 5.60:1 5.60:1 5.60:1 5.60:1
Each Fiscal Quarter during each Fiscal Year ending thereafter: 5.60:1"
ARTICLE III
-----------
Waivers
-------
Section 3.01. Waiver of Events of Default.
---------------------------
(a) The Lender hereby waives the following Events of Default: (i) the
CCI Adjusted Tangible Net Worth for the Fiscal Quarter ending December 31, 1997
was less than $21,000,000, in breach of Section 9.16 of the Loan Agreement, and
(ii) the CCI Consolidated Group's Debt Ratio for the Fiscal Quarter ending
December 31, 1997 was greater than 7.7 to 1.0, in breach of Section 9.17 of the
Loan Agreement.
(b) The foregoing waiver is only applicable to and shall only be
effective to the extent described above. The waiver is limited to the facts and
circumstances referred to herein and shall not operate as (i) a waiver of or
consent to non-compliance with any other section or provision of the Loan
Agreement, (ii) a waiver of any right, power, or remedy of the Lender under the
Loan
-4-
Agreement (except as provided herein), or (iii) a waiver of any other Event of
Default or Event which may exist under the Loan Agreement.
ARTICLE IV
----------
Ratifications, Representations and Warranties
---------------------------------------------
Section 4.01. Ratifications. The terms and provisions set forth in this
-------------
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement, including, without
limitation, all financial covenants contained therein, are ratified and
confirmed and shall continue in full force and effect. Lender and Borrower
agree that the Agreement as amended hereby shall continue to be legal, valid,
binding and enforceable in accordance with its terms.
Section 4.02. Representations and Warranties. Borrower hereby represents
------------------------------
and warrants to Lender that the execution, delivery and performance of this
Amendment and all other loan, amendment or security documents to which Borrower
is or is to be a party hereunder (hereinafter referred to collectively as the
"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.
ARTICLE V
---------
Conditions Precedent
--------------------
Section 5.01. Conditions. The effectiveness of this Amendment is subject
----------
to the satisfaction of the following conditions precedent (unless specifically
waived in writing by the Lender):
(a) Lender shall have received all of the following, each dated
(unless otherwise indicated) as of the date of this Amendment, in form and
substance satisfactory to Lender in its sole discretion:
(i) Company Certificate. A certificate executed by the Secretary
-------------------
or Assistant Secretary of Borrower certifying (A) that Borrower's
Board of Directors has met and adopted, approved, consented to and
ratified the resolutions attached thereto which authorize the
execution, delivery and performance by Borrower of the Amendment and
the Loan Documents, (B) the names of the officers of Borrower
authorized to sign this Amendment
-5-
and each of the Loan Documents to which Borrower is to be a party
hereunder, (C) the specimen signatures of such officers, and (D) that
neither the Articles of Incorporation nor Bylaws of Borrower have been
amended since the date of the Agreement;
(ii) No Material Adverse Change. There shall have occurred no
--------------------------
material adverse change in the business, operations, financial
condition, profits or prospects of Borrower, or in the Collateral
since December 31, 1997, and the Lender shall have received a
certificate of Borrower's chief executive officer to such effect;
(iii) Other Documents. Borrower shall have executed and
---------------
delivered such other documents and instruments as well as required
record searches as Lender may require.
(b) 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, Jenkens & Xxxxxxxxx, a Professional Corporation.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in the Agreement or any other document or
documents relating thereto, including, without limitation, any Loan Document
furbished 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 thereon.
Section 6.02. Reference to Agreement. The Agreement, each of the Loan
----------------------
Documents, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference therein to the Agreement shall mean a reference to the Agreements
amended hereby.
Section 6.03. 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-
Section 6.04. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
--------------
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN THE STATE OF OKLAHOMA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OKLAHOMA.
Section 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; provided, however, that Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Lender. Lender may assign any or all of its rights or obligations
hereunder without the prior consent of Borrower.
Section 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.
Section 6.07. Effect of Waiver. No consent or waiver, express or implied,
----------------
by Lender to or of any breach of or deviation from any covenant or condition of
the Agreement or duty shall be deemed a consent or waiver to or of any other
breach of or deviation from the same or any other covenant, condition or duty.;
No failure on the part of Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Amendment, the Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Amendment, the Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided for in the
Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.
Section 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.
Section 6.09. Releases. As a material inducement to Lender to enter into
--------
this Amendment, Borrower hereby represents and warrants that there are no claims
or offsets against, or defenses or counterclaims to, the terms and provisions of
and the other obligations created or evidenced by the Agreement or the other
Loan Documents. Borrower hereby releases, acquits and forever discharges
Lender, and its successors, assigns, and predecessors in interest, their
parents, subsidiaries and affiliated organizations, and the officers, employees,
attorneys, agents of each of the foregoing (all of whom are herein jointly and
severally referred to as the "Released Parties") from any and all liability,
----------------
damages, losses, obligations, costs, expenses, suits, claims, demands, causes of
action for damages or any other relief, whether or not
-7-
now known or suspected, of any kind, nature or character, at law or in equity,
which Borrower now has or may have ever had against of the Released Parties,
including, but not limited to, those relating to (a) usury or penalties or
damages therefor, (b) allegations that a partnership existed between Borrower
and the Released Parties, (c) allegations of unconscionable acts, deceptive
trade practices, lack of good faith or fair dealing, lack of commercial
reasonableness or special relationships, such as fiduciary, trust or
confidential relationships, (d) allegations of dominion, control, alter ego,
instrumentality, fraud, misrepresentation, duress, coercion, undue influence,
interference or negligence, (e) allegations of notorious interference with
present or prospective business relationships or of antitrust, or (f) slander,
libel or damage to reputation (hereinafter being collectively referred to as the
"Claims"), all of which Claims are hereby waived.
------
Section 6.10. Expenses of Lender. Borrower agrees to pay on demand (i)
------------------
all costs and expenses reasonably 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 subsequent amendments,
modifications, and supplements hereto or thereto, including, without limitation,
the costs and fees of Lender's legal counsel and the allocated cost of staff
counsel and (ii) all costs and expenses reasonably incurred by Lender in
connection with the enforcement or preservation of any rights under the
Agreement, this Amendment and/or other Loan Documents, including, without
limitation, the costs and fees of Lender's legal counsel and the allocated cost
of staff counsel.
Section 6.11. NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE OTHER
------------------
LOAN DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN THE LENDER AND
BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN LENDER AND BORROWER.
-8-
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
"BORROWER"
CLIMATE MASTER, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------------
Xxxx X. Xxxxxx
Vice President
INTERNATIONAL ENVIRONMENTAL CORPORATION
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------------
Xxxx X. Xxxxxx
Vice President
EL DORADO CHEMICAL COMPANY
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------------
Xxxx X. Xxxxxx
Vice President
SLURRY EXPLOSIVE CORPORATION
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------------
Xxxx X. Xxxxxx
Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
-9-
CONSENT AND REAFFIRMATIONS
--------------------------
The undersigned hereby acknowledges the execution of, and consents to, the
terms and conditions of that certain First Amendment to Amended and Restated
Loan and Security Agreement dated as of March 12, 1998, between Climate Master,
Inc., International Environmental Corporation, El Dorado Chemical Corporation,
Slurry Explosive Corporation and BankAmerica Business Credit, Inc. ("Creditor")
and reaffirms its obligations under that certain Continuing Guaranty (the
"Guaranty") dated as of November 21, 1997, made by the undersigned in favor of
the Creditor, and acknowledges and agrees that the Guaranty remains in full
force and effect and the Guaranty is hereby ratified and confirmed.
Dated as of March 12, 1998.
CLIMACHEM, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx
Vice President
-10-
CONSENTS AND REAFFIRMATIONS
---------------------------
Each of the undersigned hereby acknowledges the execution of, and consents
to, the terms and conditions of that certain First Amendment to Amended and
Restated Loan and Security Agreement dated as of March 12, 1998, between Climate
Master, Inc., International Environmental Corporation, El Dorado Chemical
Corporation, Slurry Explosive Corporation and BankAmerica Business Credit, Inc.
("Creditor") and each reaffirms its obligations under that certain Continuing
Guaranty with Security Agreement (the "Guaranty") dated as of November 21, 1997,
and acknowledges and agrees that such Guaranty remains in full force and effect
and each Guaranty is hereby ratified and confirmed.
Dated as of March 12, 1998.
LSB INDUSTRIES, INC.
LSB CHEMICAL CORP.
L&S AUTOMOTIVE PRODUCTS CO.
L&S BEARING CO.
INTERNATIONAL BEARINGS, INC.
LSB EXTRUSION CO.
ROTEX CORPORATION
TRIBONETICS CORPORATION
SUMMIT MACHINE TOOL MANUFACTURING
CORP.
XXXXX MACHINERY MANUFACTURING
CORPORATION
CHP CORPORATION
KOAX CORP.
APR CORPORATION
CLIMATE MATE INC.
THE ENVIRONMENTAL GROUP, INC.
UNIVERSAL TECH CORPORATION
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------------
Xxxx X. Xxxxxx
Senior Vice President acting on
behalf of each of the above
-11-
