Loan and Security Agreement (Mixed Acid North Carolina Plant) [Amendment No. 1] - DSN Corp. and The CIT Group/Equipment Financing Inc.
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
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(Mixed Acid North Carolina Plant)
This First Amendment to Loan & Security Agreement ("First Amendment") is
dated as of November 15, 1995, and is made and entered into by and between DSN
Corporation, an Oklahoma corporation ("Borrower) and The CIT Group/Equipment
Financing, Inc., a New York corporation ("Lender").
RECITALS
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This First Amendment is made with reference to the following facts:
A. Borrower and Lender entered into a certain Loan Security Agreement
dated as of April 5, 1995 ("Loan Agreement") pursuant to which Lender made
available to Borrower a credit facility to finance the acquisition and
construction of the Mixed Acid Plant located at the Koch Sulphur Products
Company plant facilities in Wilmington, North Carolina. Terms used herein and
not otherwise defined shall have the meaning specified for such terms in the
Loan Agreement.
B. Construction delays were subsequently encountered with respect to the
construction and completion of the Mixed Acid Plant resulting in extensions
relating to the final funding under the Loan Agreement.
C. Borrower also informed Lender that it was in violation of the tangible
net worth covenant provided in Section 6.10 of the Loan Agreement, and Borrower
requested a waiver of such default and amendment to Section 6.10 resetting the
tangible net worth tests. Lender has agreed to such covenant modifications.
D. Lender and Borrower have agreed to certain other modifications and
amendments to the Loan Agreement as set forth in this First Amendment.
NOW THEREFORE, in consideration of the terms and conditions herein and of
any loans or other credit facilities heretofore, now or hereafter made to or for
the benefit of Borrower by Lender, the parties hereto agree to the following
amendments and modifications to the Loan Agreement:
1. Definitions. The term "Note" shall be amended to mean that certain
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Amended and Restated Promissory Note which evidences the Loan, substantially in
the form attached hereto as Exhibit "A".
2. Certification re Mixed Acid Plant Completion. Borrower and EDC hereby
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certify to Lender that (i) the Mixed Acid Plant has been fully constructed and
completed substantially in accordance with the Plans and Specifications and is
in operation;
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(ii) the Mixed Acid Plant as completed, complies with applicable zoning,
building and land use laws; (iii) direct connection has been made to all roads,
railtrack, pipelines, supply lines, water, gas, sewer, telephone and electrical
facilities necessary for the operation and use of the Mixed Acid Plant; (iv) the
Mixed Acid Plant Equipment Lease and the Consulting Agreement are in full force
and effect; (v) a valid certificate of final completion has been delivered to
and accepted by Koch Sulphur Products Company (a copy of which is delivered
herewith); (vi) all inspections by applicable governmental entities necessary to
permit the start-up of the Mixed Acid Plant have been completed and all
necessary certificates of approvals for occupation and operation of the Mixed
Acid Plant have been obtained; and (vii) the period for filing the mechanics'
and materialmen's liens has expired without any material liens having been filed
or reported or lien waivers have been obtained from contractors which performed
work or material except for the welding repair work at the Mixed Acid Plant .
3. Tangible Net Worth. Lender has consented to the waiver of LSB's
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violation of the tangible net worth covenant provided in Section 6.10 of the
Loan Agreement for the quarter ended at September 30, 1995. Section 6.10 of the
Loan Agreement is amended in its entirety to read as follows:
"Section 6.10 Tangible Net Worth". LSB shall maintain at all times, on
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a consolidated basis, a minimum tangible net worth of $75,000,000 after
subtracting treasury stock and $85,000,000 before subtracting treasury
stock as at December 31, 1995 and March 31, 1996, $76,000,000 after
subtracting treasury stock and $86,000,000 before subtracting treasury
stock as at June 30, 1996, $77,000,000 after subtracting treasury stock and
$87,000,000 before subtracting treasury stock as at September 30, 1996 and
$78,000,0000 after subtracting treasury stock and $88,000,000 before
subtracting treasury stock as at December 31, 1996. Thereafter, LSB shall
maintain a minimum tangible net worth of not less than $85,000,000 after
subtracting treasury stock. The term tangible net worth is defined as total
stockholders' equity, after deducting any treasury stock, less all assets
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that are considered intangible assets under GAAP (including but not limited
to goodwill, patents, trademarks, certain deferred charges (as approved by
Lender) and customer lists).
LSB shall also maintain, on a consolidated basis, a leverage position
(defined as total liabilities divided by tangible net worth, after
deducting treasury stock) of 2.25:1 as at December 31, 1995, and at all
times thereafter."
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4. Administrative Fee. Borrower shall pay to Lender, concurrently with
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the execution of this First Amendment a $2,500 administrative fee in connection
with the tangible net worth waiver and modifications.
5. Disbursement. Pursuant to Borrower's Request for Advance, Lender shall
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make the final disbursement of the Loan and Borrower shall execute the Amended
and Restated Promissory Note.
6. Conditions Subsequent to Lending. Within thirty days of the date of
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the execution of this First Amendment:
(a) Borrower shall provide Lender with amendments to the term and fee
under the Consulting Agreement and the term and rents under the Mixed Acid
Plant Equipment Lease in such amounts and for such terms as may be
acceptable to Lender, and its sole discretion;
(b) UCC follow-up searches shall be obtained reflecting Lender's
first priority lien in the personal property Collateral; and
(c) Borrower shall pay to Lender in full all fees and expenses.
7. Representations and Warranties. Borrower represents and warrants as
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follows:
(a) Each of the representations and warranties contained in the Loan
Agreement is hereby reaffirmed as of the date hereof, each as if set forth
herein;
(b) The execution, delivery and performance of this First Amendment
are within Borrower's powers, have been duly authorized by all necessary
action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restrictions binding on Borrower;
(c) This First Amendment is a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms; and
(d) No event has occurred and is continuing or would result from this
First Amendment which constitutes a Default under the Loan Agreement, as
amended and modified hereby.
8. Miscellaneous. This First Amendment shall be part of the Loan
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Agreement, the terms of which are incorporated herein, and the breach of any
representation, warranty or covenant contained herein or the failure to observe
or comply with any term or agreement contained herein, shall constitute a
Default under the Loan Agreement and Lender shall be entitled to exercise
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all rights and remedies it may have under the Loan Agreement, the Loan Documents
and at applicable law. Borrower agrees to pay all costs, expenses and attorneys'
fees incurred by Lender in connection with the negotiation and preparation of
this First Amendment and any other documents in connection herewith including
all search, recording and title insurance expenses and in carrying out or
enforcing the terms of this First Amendment. Except as expressly provided
herein, Lender is not waiving any rights under the Loan Agreement or any other
Loan Document and, except as expressly provided herein or as previously modified
in a writing signed by Lender, all of the terms, covenants, and conditions of
the Loan Agreement remain unmodified and in full force and effect. Capitalized
terms used herein and not otherwise defined shall have the same meaning as set
forth in the Loan Agreement. This First Amendment may be executed in
counterparts, which counterparts, when so executed and delivered, shall together
constitute but one original.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to be effective as of the first date above written.
"Borrower" "Lender"
DSN CORPORATION, THE CIT GROUP/EQUIPMENT
an Oklahoma corporation FINANCING INC.,
a New York corporation
By: /s/ James L. Wewers By: ______________________________
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Its: V.P. Its: _____________________________
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"LSB"
LSB INDUSTRIES, INC.
a Delaware corporation,
Agreed as to Section 2 only.
By: /s/ B. H. Golsen
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Its: Vice-Chairman
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The undersigned Guarantors acknowledge and consent to the foregoing First
Amendment, confirm that such additional loans by Lender are part of the
Obligations guaranteed by each of the undersigned's Guaranty, and further
confirm that each such Guaranty is in full force and effect.
LSB INDUSTRIES, INC.,
a Delaware corporation
By: /s/ B. H. Golsen
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Its: Vice-Chairman
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LSB CHEMICAL CORP.,
an Oklahoma corporation
By: /s/ B. H. Golsen
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Its: Vice-President
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