Exhibit 10.15 A
SECOND AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment")
---------
dated effective as of November 30, 2001 (the "Second Amendment Effective Date"),
-------------------------------
is executed and entered into by and between ACR GROUP, INC., a Texas corporation
(the "Borrower"), the undersigned Guarantors and BANK OF AMERICA, N.A., a
--------
national banking association (the "Lender").
------
Recital:
-------
A. The Borrower, joined by the Guarantors, and the Lender are parties to
the certain Amended and Restated Loan and Security Agreement dated as of May 25,
2000 (as amended by that certain First Amendment to Amended and Restated Loan
and Security Agreement dated effective as of March 30, 2001, and as the same may
be further modified, amended or restated from time to time, the "Agreement"),
---------
and have agreed to amend the Agreement as provided below.
B. NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
-----------
Section 1.1 Definitions. Unless otherwise defined in this Amendment, terms
-----------
defined by the Agreement, where used in this Amendment, shall have the same
meanings in this Amendment as are prescribed by the Agreement, as amended by
this Amendment and any prior amendment.
ARTICLE II
Amendments
----------
Section 2.1 Amendment to Article 2D. Effective on and after the Second
-----------------------
Amendment Effective Date, Article 2D of the Agreement hereby is amended and
restated in its entirety to read as follows:
"ARTICLE 2D
[Intentionally Omitted.]"
On and after the Second Amendment Effective Date, (i) the commitment of the
Lender to make Acquisition Loans to the Borrower is terminated and (ii) all
references to the defined term "Acquisition Loans" in the Agreement are null and
void and of no effect.
Section 2.2 Amendment to Section 10.1. Effective as of the Second Amendment
-------------------------
Effective Date, Section 10.1 of the Agreement hereby is amended and restated in
its entirety to read as follows:
Section 10.1 Financial Ratios.
----------------
(a) Maximum Leverage Ratio. Permit the Leverage Ratio of Borrower and its
----------------------
Subsidiaries on a consolidated basis, as of the last day of any of the
following specified fiscal quarters, to be greater than the
corresponding amount specified for such fiscal quarter:
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 1
Fiscal Quarter Ending Maximum Ratio
--------------------- -------------
November 30, 2001 7.00 to 1.00
February 28, 2002 6.75 to 1.00
May 31, 2002 6.75 to 1.00
August 31, 2002 6.00 to 1.00
the last day of each
fiscal quarter thereafter: 5.25 to 1.0
(b) Minimum Tangible Net Worth. Permit the Tangible Net Worth of Borrower
--------------------------
and its Subsidiaries, on a consolidated basis, as of the last day of
any of the following specified fiscal quarters, to be less than the
corresponding amount specified for such fiscal quarter:
Fiscal Quarter Ending Minimum Amount
--------------------- --------------
November 30, 2001 $5,900,000
February 28, 2002 $4,500,000
May 31, 2002 $5,100,000
the last day of each fiscal $5,100,000 plus an amount
quarter thereafter equal to fifty percent (50%)
of the cumulative Adjusted Net
Income of the Borrower and its
Subsidiaries on a consolidated
basis
(c) Free Cash Flow to Fixed Charges. Permit the ratio of Free Cash Flow
-------------------------------
to Fixed Charges, determined for Borrower and its Subsidiaries on a
consolidated basis as of the end of any fiscal quarter for the
preceding four fiscal quarters, to be less than the ratios specified
as follows:
Fiscal Quarter Ending Minimum Ratio
--------------------- -------------
November 30, 2001 .70 to 1.0
February 28, 2002 .95 to 1.0
May 31, 2002 1.05 to 1.0
the last day of
each fiscal quarter thereafter: 1.15 to 1.0
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 2
ARTICLE III
Waiver of Specified Event of Default
------------------------------------
Section 3.1 Waiver of Specified Event of Default. Subject to Section
------------------------------------
12.10 of the Loan and Security Agreement, effective as of the Second Amendment
Date the Lender waives any Event of Default which exists by reason of the
Borrower's non-compliance with the requirements of Sections 10.1(a) and 10.1(c)
of the Loan and Security Agreement with respect to the fiscal quarter ending
August 31, 2001.
Section 3.2 Limitation. The waiver granted pursuant to Section 3.1 of
----------
this Amendment is expressly limited as provided therein.
ARTICLE IV
Miscellaneous
-------------
Section 4.1 Acknowledgment of Termination of Facility for Acquisition
---------------------------------------------------------
Loans. Effective as of the Second Amendment Effective Date, the Borrower
- -----
acknowledges that the facility for Acquisition Loans has been terminated and
that the Lender has no commitment or obligation with respect thereto.
Section 4.2 Conditions Precedent. The effectiveness of this Amendment
--------------------
is subject to the satisfaction of each of the following conditions precedent:
(a) The Lender shall have received all of the following, each
dated the date of the Second Amendment Effective Date, in form and
substance satisfactory to the Lender:
(i) Amendment. This Amendment, duly executed by each of
---------
the Borrower, the Guarantors, and the Lender; and
(ii) Authorizing Resolutions. Copies of all action taken
-----------------------
by the Guarantors to authorize the execution, delivery and
performance of the Consent and Agreement by Subsidiaries
certified by the corporate secretary of each Guarantor
effective as of the Second Amendment Effective Date;
(b) On the Second Amendment Effective Date and as of the date
of signing by the Borrower and the Guarantors of this Amendment, after
giving effect to this Amendment, the representations and warranties
contained in this Amendment, the Agreement, as amended hereby, and all
other Loan Documents shall be true and correct as if made on such
dates (except those, if any, which by their terms specifically relate
only to a different date);
(c) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all other agreements,
documents and instruments executed and/or delivered pursuant hereto,
and all legal matters incident thereto, shall be reasonably
satisfactory to the Lender; and
(d) On the Second Amendment Effective Date and as of the date
of signing by the Borrower and the Guarantors of this Amendment, after
giving effect to this Amendment, no Default or Event of Default shall
have occurred and be continuing.
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT-Page 3
Section 4.3 Representations and Warranties.
------------------------------
(a) Each of the Borrower and the Guarantors has the right
and power, and has taken all necessary action to authorize it, to
execute, deliver and perform this Agreement and each of the other Loan
Documents in accordance with their respective terms. This Agreement
has been duly executed and delivered by the duly authorized officers
of each of the Borrower and the Guarantors and is a legal, valid and
binding obligation of each of the Borrower and the Guarantors,
respectively, enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency and similar laws of general
application.
(b) On the Second Amendment Effective Date and as of the
date of signing by the Borrower and Guarantors of this Amendment,
after giving effect to this Amendment, the representations and
warranties contained in this Amendment, the Agreement, as amended
hereby, and all other Loan Documents are true and correct as if made
on such dates (except those, if any, which by their terms specifically
relate only to a different date).
(c) On the Second Amendment Effective Date and as of the
date of signing by the Borrower and the Guarantors of this Amendment,
after giving effect to this Amendment, no Default or Event of Default
has occurred and is continuing.
Section 4.4 Reaffirmation and Release. The Loan Documents remain in
-------------------------
full force and effect, as amended by this Amendment. Each of the of the Borrower
and the Guarantors represents, warrants and agrees that as of Second Amendment
Effective Date and as of the date of signing by the Borrower and the Guarantors
of this Amendment there are no claims or offsets against or defenses or
counterclaims to its obligations under the Loan Documents and hereby waives any
and all such claims, offsets, defenses or counterclaims, whether known or
unknown, arising on or prior to such date. In consideration of this Second
Amendment, the Borrower and each Guarantor on its own behalf and on behalf of
their respective predecessors, successors and assigns (collectively, the
"Releasing Parties"), hereby irrevocably and forever releases, remises,
discharges and holds harmless the Lender and all of its respective officers,
directors, employees, agents, attorneys and representatives, and all of their
respective predecessors, successors, and assigns, from any and all claims,
causes of action, demands, and liabilities of any kind whatsoever, if any,
whether direct or indirect, fixed or contingent, liquidated or nonliquidated,
disputed or undisputed, asserted or non-asserted, known or unknown, which any of
the Releasing Parties has relating in any way to any event, circumstance,
occurrence, act, action, or failure to act in connection with or otherwise
concerning this Second Amendment, the other Loan Documents or the transactions
contemplated therein from the beginning of time through the Second Amendment
Effective Date.
Section 4.5 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment.
Section 4.6 Reference to Agreement. Each of the Loan Documents is
----------------------
hereby amended so that any reference in such Loan Documents to the Agreement,
whether direct or indirect, shall mean a reference to the Agreement as amended
by this Amendment.
Section 4.7 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.
Section 4.8 General. This Amendment, when signed by the Borrower, the
-------
Guarantors and the Lender, (i) shall be deemed effective as of the Second
Amendment Effective Date, (ii) contains the entire agreement among the parties
and may not be amended or modified except in writing signed by all parties,
(iii) SHALL BE GOVERNED AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS, (iv) may be executed in any number of counterparts, each of which shall
be valid as an original and all of which shall be one and the same agreement and
(vi) shall constitute a Loan Document. A telecopy or other electronic
transmission of any executed counterpart shall be deemed valid as an original.
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT-Page 4
THIS WRITTEN AGREEMENT REPRESENTS 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 ORAL AGREEMENTS
BETWEEN THE PARTIES.
SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT-Page 5
Executed as of this ____ day of February, 2002.
BORROWER:
ACR GROUP, INC.
By:________________________
Name:______________________
Title:_____________________
Executed as of this ____ day of February, 2002.
LENDER:
BANK OF AMERICA, N.A.
By:_______________________
Name:_____________________
Title:____________________
SECOND AMENDMENT TO AMENED AND RESTATED
LOAN AND SECURITY AGREEMENT - Page 6
CONSENT AND AGREEMENT BY SUBSIDIARIES
Reference is made to the forgoing Second Amendment to Amended and Restated
Loan and Security Agreement (the "Agreement"). For value received, and in
---------
consideration of benefits to the undersigned under and resulting from the
Agreement and the other Loan Documents, and without impairing any obligation of
the undersigned under any Guaranty previously executed for the benefit of the
Lender (or any of its predecessors), each of the undersigned Subsidiaries of the
Borrower consents to and agrees to be bound by the Agreement. Without limiting
the forgoing, each of the undersigned Subsidiaries hereby (i) ratifies and
confirms all security interests and liens previously granted by it to or for the
benefit of the Lender and agrees that such security interests and liens shall
continue in full force and effect as security for the Secured Obligations as
provided by the Agreement and the Loan Documents and (ii) ratifies and confirms
any and all Guaranty Agreements previously executed by it for the benefit of the
Lender (or any predecessor of the Lender) as being and continuing in full force
and effect.
Signed by the undersigned Subsidiaries of the Borrower effective as of the
Second Amendment Effective Date.
ACR SUPPLY, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
TOTAL SUPPLY, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
HEATING AND COOLING SUPPLY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
VALLEY SUPPLY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
ENER-TECH INDUSTRIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
CONSENT AND AGREEMENT BY SUBSIDIARIES
FLORIDA COOLING SUPPLY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
LIFETIME FILTER, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
WEST COAST HVAC SUPPLY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
CONTRACTORS HEATING & SUPPLY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
CAC DISTRIBUTORS, INC. (f/k/a Time Energy Systems
Southwest, Inc.)
By:___________________________________
Name:_________________________________
Title:________________________________
CONSENT AND AGREEMENT BY SUBSIDIARIES