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Exhibit 10.5.7
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into this 6th day of October, 1994, by and between GIANT
CEMENT COMPANY, a Delaware corporation (hereinafter referred to as "Borrower"),
with its chief executive office and principal place of business at Highway 453,
Harleyville, South Carolina 29448 and THE CIT GROUP/EQUIPMENT FINANCING, INC.,
a New York corporation (hereafter referred to as "Lender"), with an office at
900 Ashwood Parkway, Suite 600, Atlanta, Georgia 30338.
W I T N E S S E T H:
WHEREAS, Lender and Borrower are parties to a certain Loan and Security
Agreement dated November 23, 1993 (the "Loan Agreement"), pursuant to which
Lender has made a certain term loan to Borrower; and
WHEREAS, in order to induce Lender to enter into the Loan Agreement,
Borrower's parent corporation, Giant Group, Ltd., a Delaware corporation
("Group"), executed and delivered that certain Continuing Guaranty Agreement
dated November 23, 1993, in favor of Lender (the "Original Guaranty")
guaranteeing any and all Obligations at any time owing by Borrower to Lender;
WHEREAS, Borrower is no longer a wholly owned subsidiary of Group and
Group has requested that Lender release it from its obligations under the
Guaranty and certain other Security Documents; and
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WHEREAS, Borrower is now a wholly owned subsidiary of Giant Cement
Holding, Inc., a Delaware corporation ("Holding"); and
WHEREAS, Holding has agreed to execute and deliver to Lender its
absolute and unconditional guaranty of all of the Obligations at any time owing
by Borrower to Lender (the "New Guaranty"); and
WHEREAS, simultaneously with the delivery of the New Guaranty to
Lender, Lender has agreed to release Group from its obligations under the
Original Guaranty and certain other Security Documents; and
WHEREAS, the parties desire to amend the Loan Agreement to reflect the
termination of the Original Guaranty and certain other Security Documents, the
substitution of Holding as the guarantor of the Obligations and as otherwise
more particularly set forth hereinafter.
NOW, THEREFORE, for and in consideration of TEN DOLLARS ($10.00) in
hand paid and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
(a) Amendment to Section 1. Section 1 of the Loan Agreement is
hereby amended as follows:
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(i) By deleting the definitions of "Collaterial Value Maintenance
Agreement," "Rally's Stock" and "Stock Pledge Agreement" in their entirety.
(ii) By deleting the definitions of "Guarantor," "Guaranty" and
"Security Documents" in their entirety and by substituting in lieu thereof
the following:
Guarantor - Holding and any other person who hereafter shall
guarantee the whole or any part of the Obligation.
Guaranty - that certain Continuing Guaranty Agreement dated
October 6, 1994, from Holding shall unconditionally guarantee payment
of the Obligations.
Holding - Giant Cement Holding, Inc., a Delaware corporation.
Security Document - the Mortgages, the Guaranty and all other
instruments and agreement now or at any time hereinafter securing the
whole or any part of the Obligations.
(iii) By inserting the following definition in the appropriate
alphabetical order
Net Income - the net income of Borrower for the period in
question after giving effect to deduction of or provision for all
operating expenses, all taxes and reserves (including reserves for
deferred taxes) and all other proper deductions, all determined in
accordance with GAAP, provided that there shall be excluded: (i) any
restoration of any contingency reserve, except to the extent that
provision for such reserve was made out of income during such period,
(ii) any net gains or losses on the sale or other disposition, not in
the ordinary course of business, of capital assets, provided that
there shall also be excluded any related charges for taxes thereon,
(iii) any net gain arising from the collection of the proceeds of any
insurance
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policy, (iv) any write-up of any asset, and (iv) any other
extraordinary item.
(b) Amendment to Section 2. Section 2 of the Loan Agreement is hereby
amended by deleting Section 2.3 in its entirety and by substituting in lieu
thereof the following:
2.3 Mandatory Prepayments. Borrower shall be obligated to
prepay the principal balance of the Note by an amount equal to (a) the
Net Proceeds received by Borrower from any sale or other disposition
of Equipment to the extent that such Net Proceeds are required to be
turned over to Borrower in accordance with Section 7.2 hereof, or any
sale of any Real Property Collateral and (b) the Net Proceeds received
by Borrower from any condemnation of any of the Collateral (except to
the extent any such Net Proceeds from the condemnation of any Real
Property Collateral are used for the reconstruction of the Real
Property Collateral in accordance with the terms of the Mortgages).
Nothing in this Section 2.3 shall be deemed to authorized Borrower to
sell any Equipment except as authorized by Section 7.2 hereof, or any
Real Property Collateral, except as authorized by the Mortgages.
(c) Amendment to Section 9. Section 9 of the Loan Agreement is hereby
amended as follows:
(i) By deleting Section 9.1(J) in its entirety and by
substituting in lieu thereof the following:
(J) Promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or
reports which any Guarantor hereafter makes available to its
shareholders and copies of any regular, periodic and special reports
or registration statements which any Guarantor files with the
Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange.
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(ii) By deleting Section 9.1(O) in its entirety and by
substituting in lieu thereof the following: "(O) [OMITTED
INTENTIONALLY]."
(iii) By deleting Section 9.2(D) in its entirety and by
substituting in lieu thereof the following:
(D) Guarantee, assume, endorse or otherwise, in any way, become
directly or contingently liable with respect to the Indebtedness
of any Person except by endorsement of instruments or items of
payment for deposit or collection and except as set forth in that
certain Guaranty Agreement (Keystone Cement Company Obligations)
dated as of November 23, 1993, by and among Borrower, Group, KCC
and Giant Resource Recovery Company, Inc., a Delaware corporation
(collectively, "Keystone Guarantors") whereby Keystone Guarantors
guaranteed any and all obligations owing by Keystone Cement
Company, a Pennsylvania corporation, to General Electric Capital
Corporation.
(iv) By deleting Section 9.3(B) in its entirety and by
substituting in lieu thereof the following:
(B) Borrower shall maintain an Adjusted Tangible Net Worth as
follows for the period corresponding thereto:
Adjusted Tangible Net Worth Period
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$20,000,000 Date hereof through
March 30, 1995
$20,000,000 plus thirty March 31, 1995 through
percent (30%) of Borrower's March 30, 1996
Net Income for the period from
the date on which the First
Amendment to this Agreement
becomes effective through
December 31, 1994
$20,000,000 plus thirty March 31, 1996 through
percent (30%) of Borrower's March 30, 1997
Net Income for its fiscal
year ended December 31, 1995
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$20,000,000 plus thirty March 31, 1997, through
percent (30%) of Borrower's March 30, 1998
Net Income for its fiscal
year ended December 31, 1996
$20,000,000 plus thirty March 31, 1998 through
percent (30%) of Borrower's March 30, 1999
Net Income for its fiscal
year ended December 31, 1997
For purposes of this Section 9.3(B), the Adjusted Tangible Net
Worth Borrower is required to maintain will be increased on March 31
of each year based upon Borrower's Net Income for the immediately
preceding fiscal year as shown on the supplemental consolidating
schedule to the audited financial statements of Borrower for such
fiscal year required pursuant to Section 9.1 (I) hereof, which
schedule shall agree to the financial statements as certified by a
firm of independent certified public accountants of recognized
national standing or otherwise acceptable to Lender. If such audited
financial statement and schedule is not timely delivered by Borrower
to Lender on or before March 31 of any year for the immediately
preceding fiscal year, then the Adjusted Tangible Net Worth Borrower is
required to maintain will be increased on such March 31 based upon the
Net Income of Borrower as shown in Borrower's unaudited financial
statement for the immediately preceding fiscal year until the audited
financial statement and schedule for such fiscal year have been
delivered by Borrower as required by Section 9.1(I). Upon Borrower's
delivery of its audited financial statements and consolidating
schedule, the Adjusted Tangible Net Worth Borrower is required to
maintain will then be adjusted to reflect an increase based upon
Borrower's audited Net Income.
(d) Amendment to Section 10. Section 10 of the Loan
Agreement is hereby amended by deleting Section 10.1(N) therefrom in its
entirety and by substituting in lieu thereof the following: "(N) [OMITTED
INTENTIONALLY]."
3. Acknowledgement Regarding Change in Ownership. Lender hereby
acknowledges that Borrower is no longer a wholly owned subsidiary of Group,
that Borrower has become a wholly owned subsidiary of Holding and that such
change in ownership of Borrower
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does not constitute an Event of Default under Section 11(K) of the Loan
Agreement.
4. Termination of Security Documents and Release of Cash
Collateral and Rally's Stock. Lender and Borrower hereby acknowledge and agree
that, simultaneously with the effectiveness of this Amendment: (i) the Original
Guaranty, the Stock Pledge Agreement and the Collateral Value Maintenance
Agreement are terminated and of no further force or effect, (ii) the Rally's
Stock and the Original Guaranty will be promptly released by Lender and
delivered to Group at the New York offices of Reid & Priest, counsel to
Borrower and Group, and (iii) Lender will promptly release the Cash Collateral
(as defined in the Collateral Value Maintenance Agreement) and distribute same
at the direction of Borrower given by written notice to Lender.
Notwithstanding the foregoing clause (iii), Borrower acknowledges and agrees
that the Cash Collateral to be released by Lender is Cash Collateral pledged by
Group as security for the Original Guaranty and does not include the Cash
Collateral (as defined in the Loan Agreement) pledged by Borrower to Lender to
satisfy the requirements of Section 9.1(T) of the Loan Agreement, which Cash
Collateral Lender will retain.
5. Commitment Fee. Borrower shall pay to Lender a Commitment Fee
of $22,500, which shall be deemed fully earned upon the execution of this
Amendment, shall be paid concurrently with the execution of this Amendment and
shall not be subject to rebate except as may be required by Applicable Law.
Such fee shall compensate Lender for the cost associated with the origination,
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structuring, processing, approving and closing of the transactions contemplated
by this Amendment, including, but not limited to, administrative,
out-of-pocket, general overhead and lost opportunity costs, but not including
any expenses for which Borrower has agreed to reimburse Lender pursuant to any
other provisions of this Amendment or any of the Loan Documents, such as, by
way of example, legal fees and expenses.
6. Ratification and Reaffirmation. Borrower hereby ratifies and
reaffirms each of the Loan Documents and all of Borrower's covenants, duties
and liabilities thereunder.
7. Acknowledgements and Stipulations. Borrower acknowledges and
stipulates that the Loan Agreement and the other Loan Documents executed by
Borrower are legal, valid and binding obligations of Borrower that are
enforceable against Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or counterclaim (and
to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by Borrower); the security interests and
liens granted by Borrower in favor of Lender are duly perfected, first priority
security interests and liens; and the unpaid principal amount of the Loan on
and as of September 27, 1994, totalled $7,737,435.83.
8. Representations and Warranties. Borrower represents and
warrants to Lender, to induce Lender to enter into this Amendment, that no
Default or Event of Default exists on the date hereof; the execution, delivery
and performance of this Amendment have been
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duly authorized by all requisite corporate action on the part of Borrower and
this Amendment has been duly executed and delivered by Borrower; and except as
may have been disclosed in writing by Borrower to Lender prior to the date
hereof, all of the representations and warranties made by Borrower in the Loan
Agreement are true and correct on and as of the date hereof.
9. Conditions Precedent. The effectiveness of (i) the amendments
contained in paragraphs (a) - (d) of Section 2 hereof and (ii) Lender's
agreement to terminate or release its interest in the Cash Collateral (as
defined in the Collateral Value Maintenance Agreement), the Rally's Stock and
certain Security Documents, as more particularly described in Section 4 hereof,
is subject to the satisfaction of each of the following conditions precedent,
in form and substance satisfactory to Lender, unless satisfaction thereof is
specifically waived in writing by Lender;
(a) the execution and delivery to Lender by Holding of the
New Guaranty together with evidence satisfactory to Lender in its sole
discretion of Holding's corporate authority to execute and deliver the New
Guaranty;
(b) the completion of an initial public offering of the
stock of Holding evidenced by: (i) the full execution and delivery of (A) a
certain Underwriting Agreement (U.S. Version) (the "U.S. Underwriting
Agreement") between Holding, Group, KCC Delaware Company, a Delaware
corporation ("KCC"), and PaineWebber Incorporated, as representative of several
underwriters ("PaineWebber") to be executed on or about the date hereof and (B)
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a certain Agreement Among International Underwriters the "International
Underwriting Agreement"; the U.S. Underwriting Agreement and the International
Underwriting Agreement being referred to collectively as the "Underwriting
Agreements") between Holdings, Group, KCC and PaineWebber to be executed on or
about the date hereof; (ii) an agreement as to the purchase price of said
shares between Holding, Group, KCC and PaineWebber as set forth in a fully
executed Price Determination Agreement in substantially the form of Exhibit A
attached hererto; (iii) the payment of the purchase price for said shares on or
before the Closing Date (as defined in the Underwriting Agreements; (iv) the
receipt by Holding of not less than $2,000,000 from the sale of the initial
10,000,000 shares of Holding stock offered; (v) the delivery by Borrower to
Lender of the final, effective S-1 Registration Statement, together with all
amendments thereto, submitted by Holding to the Securities and Exchange
Commission containing representations and assurances satisfactory to Lender in
its sole discretion that, within forty-five (45) days from the Closing Date (as
defined in the Underwriting Agreements), Holding will receive any and all
proceeds from the sale of any overallotment of Holding shares; and (vi) the
execution and delivery by Borrower, Holding or any other party of such
additional documents or certificates as Lender deems necessary to evidence
receipt by Holding of the sums specified in clause (iv) and (v) above;
(c) The execution and delivery by Borrower to Lender of a compliance
certificate in form and content satisfactory to Lender
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in its sole discretion pursuant to which Borrower certifies that no Default or
Event of Default exists under the Loan Agreement;
(d) The execution and delivery by Group and Lender of a Termination,
Release and Receipt Agreement in form and content satisfactory to Lender in its
sole discretion pursuant to which, among other things, Group acknowledges its
receipt of the Original Guaranty, the Rally's Stock and certain Cash Collateral
(as defined in the Collateral Value Maintenance Agreement) and releases any
and all claims it amy have against Lender; and
(e) Lender shall have received the favorable written opinion of Reid &
Priest, counsel to Borrower and Holding, regarding Borrower, Holding, this
Amendment and the transactions contemplated by this Amendment and any of the
other Loan Documents, in form satisfactory to lender and its counsel.
10. EXPENSES OF LENDER. 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 any 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.
11. RELEASES OF CLAIMS. To induce Lender to enter into this
Amendment, Borrower hereby releases, acquits and forever discharges Lender, and
the officers, directors, agents, employees, successors and assigns of Lender
from all liabilities, claims, demands, actions or causes or actions of any kind
(if there be any), whether absolute or contingent, disputed or undisputed, at
law or in
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equity, or known or unknown that it now has or ever had against Lender arising
under or in connection with any of the Loan Documents or otherwise.
12. Effectiveness; Governing Law. This Amendment shall be effective upon
Lender's acceptance (Notice of which is hereby waived by Borrower) in Atlanta,
Georgia. Upon such acceptance, this Amendment shall be governed by and
construed in accordance with the internal laws of the State of Georgia.
13. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
14. No Novation, etc.. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement, any of the Other Agreements or any of the Security
Documents or any of the other Loan Documents, each of which shall ramain in
full force and effect. This Amendment is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
Notwithstanding any prior mutual temporary disregard of any of the terms of any
of the Loan Documents, the parties agree that the terms of each of the Loan
Documents shall be strictly adhered to on and after the date hereof.
15. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
taken together shall be one and the same instrument.
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16. WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING ARISING
OUT OF OR RELATED TO THIS AMENDMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal in New York, New York, and delivered by their
respective duly authorized officers on the date first written above.
ATTEST: GIANT CEMENT COMPANY
("Borrower")
/s/ By /s/
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Assistant Secretary
[CORPORATE SEAL] Title: Vice President
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Accepted in Atlanta, Georgia,
this 6th day of October, 1994:
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THE CIT GROUP/EQUIPMENT
FINANCING, INC. ("Lender")
By: /s/
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Title: Vice President
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