EXHIBIT 10.6
FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated as
of the ___day of August, 2003 (this "First Amendment"), by and among UNITED
STATES LIME & MINERALS, INC., a Texas corporation ("U.S. Lime"), TEXAS LIME
COMPANY, a Texas corporation wholly owned by U.S. Lime ("TLC"), ARKANSAS LIME
COMPANY, an Arkansas corporation wholly owned by U.S. Lime ("ALC") (U.S. Lime,
TLC and ALC are collectively referred to as "Borrowers" and individually as a
"Borrower"), and NATIONAL CITY BANK ("Bank").
Background
A. Borrowers and Bank are parties to a Loan and Security Agreement
dated as of February 28, 2003 (as amended, restated, or otherwise modified and
in effect from time to time, the "Loan Agreement") pursuant to which Bank
agreed, subject to the terms and conditions of the Loan Agreement, to lend to
Borrowers up to (i) Five Million Dollars ($5,000,000) on a revolving loan basis,
and (ii) Two Million Dollars ($2,000,000) on a discretionary line of credit
basis for equipment purchases, secured by Borrowers' Accounts, Inventory, and
related personal property, and the equipment purchased with Advances. All
initially capitalized terms used herein and not otherwise defined herein shall
have the same meanings ascribed to such terms in the Loan Agreement.
B. U.S. Lime has incurred $14,000,000 of additional Debt to fund the
second phase of ALC's plant construction (the "Phase II Debt"), evidenced by
promissory notes of U.S. Lime copies of which are attached hereto as Exhibit "A"
(the "Phase II Notes"). In connection with the Phase II Notes, U.S. Lime will
issue to the holders of the Phase II Notes warrants to purchase an aggregate of
162,000 shares of U.S. Lime's common stock (the "Warrants"). Borrowers and
Lenders desire to amend the Loan Agreement to, inter alia, approve the terms of
the Phase II Debt, provide for the curtailment of Dividends by U.S. Lime for a
period of two years, amend the Tangible Net Worth covenant set forth in the Loan
Agreement and provide for an increase in the maximum WC Line Amount thereunder.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Ratification. This First Amendment is a modification of the Loan
Agreement pursuant to Section 18.11 thereof. Except as expressly set forth
herein, or in any amendment to any of the documents referred to herein,
Borrowers and Bank acknowledge and agree that each and every term, condition and
provision of the Loan Agreement is hereby ratified and confirmed in full.
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2. Outstanding Indebtedness. Borrowers hereby unconditionally
acknowledge that, as of the date hereof, the outstanding principal balance of
the WC Line is $2,200,000 and that such amount, together with interest thereon
at the rates set forth therein, is owing to Bank without claim, counterclaim,
recoupment, defense or setoff of any kind.
3. Increase in Maximum WC Line Amount. The Phase II Debt constitutes an
Additional Funding, and Borrowers may increase the maximum WC Line Amount to
$6,000,000; provided that Borrowers shall give Bank not less than 10 days notice
prior to the date of increase, and on or before such date, Borrowers shall have
executed and delivered to Bank an amended and restated WC Line Note in the
original principal amount of $6,000,000 together with such other documents and
instruments Bank may require in order to effect the increase.
4. Tangible Net Worth Covenant. Section 8.2 of the Loan Agreement is
hereby amended and restated in its entirety as of the date hereof as follows:
"Permit Tangible Net Worth as of the last day of any fiscal quarter to
be less than the sum of $25,000,000 ($30,000,000 for the fiscal quarter
ended June 30, 2003 and each fiscal quarter thereafter), plus 50% of
Borrowers' cumulative Net Income from January 1, 1999 calculated for
each succeeding fiscal quarter through the last day of such fiscal
quarter.
5. Transactions With Affiliates. Borrowers represent and warrant to
Bank that the Phase II Notes, the Warrants and the related Note and Warrant
Purchase Agreement and Registration Rights Agreement (collectively, the "Phase
II Debt Documents") fully disclose the transactions contemplated thereby, and
there are no other documents or instruments executed or delivered in connection
with such transactions other than the Phase II Debt Documents and a related
Confidential Memorandum dated May 2003 prepared by Frost Securities, Inc. with
respect to U.S. Lime. Bank acknowledges that one or more of the holders of the
Phase II Notes and Warrants is an Affiliate of Borrowers, and hereby approves
the fairness and reasonableness of the Phase II Debt Documents as required by
Section 9.9 of the Loan Agreement.
6. Warrants. The Bank hereby consents to the issuance of the Warrants.
7. Suspension of Dividends. Section 9.7 of the Loan Agreement
notwithstanding, during the two-year period commencing June 30, 2003 to June 30,
2005, U.S. Lime will not declare, pay or accrue any dividend payable in cash to
any of its shareholders without the prior written consent of Bank.
8. Amendments to Phase II Debt; Notice. U.S. Lime agrees (i) not to
amend or modify the put right in the Common Stock Purchase Warrants issued to
the holders of the Phase II Debt without the prior written consent of Bank, and
(ii) to provide prompt written notice to Bank of any amendment, restatement or
other modification of any of the Phase II Debt Documents. Upon the occurrence of
an Event of Default, Borrowers shall promptly notify each holder of the Phase II
Notes thereof and of the commencement of a Standstill Period (as defined in the
Phase II Notes) if then applicable.
9. Representations and Warranties. To induce Bank to approve the
modifications contemplated by this First Amendment and the Phase II Debt,
Borrowers jointly and severally represent and warrant to Bank as follows:
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9.1 After giving effect to the modifications contained herein,
all representations, warranties and covenants made by Borrowers to Bank in the
Loan Agreement (except those relating to a specific date) are true and correct
in all material respects as of the date hereof, with the same force and effect
as though made as of the date hereof;
9.2 No Event of Default or Default has occurred and is
continuing under the Loan Agreement as of the date hereof, and neither the
execution, delivery nor performance of the Phase II Notes or the Warrants
results in the occurrence of any Event of Default or Default;
9.3 Each Borrower is a corporation validly subsisting under
the laws of the state of its incorporation; the execution, delivery and
performance of this First Amendment and any other documents and instruments
executed and delivered by the Borrowers to Bank in connection herewith (i) are
within each Borrower's corporate powers, (ii) have been duly authorized by each
Borrower's Board of Directors, (iii) do not contravene any provision of law or
any indenture, agreement or undertaking to which any Borrower is a party or by
which it is otherwise bound, any Borrower's Articles of Incorporation or bylaws,
or any resolution of the Board of Directors of any Borrower, and (iv) require no
consent or approval of any governmental authority or any third party which has
not been obtained; and
9.4 In the case of each Borrower, this First Amendment and any
other documents and instruments executed and delivered by such Borrower to Bank
in connection herewith have each been validly executed by, and are enforceable
against, such Borrower in accordance with their respective terms.
Any failure of any of the representations and warranties made by Borrowers in
this First Amendment to be true and correct in all material respects when made
shall constitute an Event of Default under the Loan Agreement.
10. Conditions Precedent. The effectiveness of amendments to the Loan
Agreement and the consents set forth herein are subject to the satisfaction of
the following conditions precedent:
10.1 Borrowers and Required Lenders (as defined in the Credit
Agreement) shall have executed and delivered an amendment to the Credit
Agreement;
10.2 Bank shall be a third party beneficiary of the
subordination and standstill provisions contained in Phase II Notes;
10.3 The Bank shall have received true, correct and complete
copies of resolutions of the Board of Directors of each Borrower authorizing the
execution, delivery and performance of this First Amendment, and the other
documents and instruments executed and delivered by any Borrower in connection
herewith, including the Phase II Notes and the Warrants certified by such
Borrower's Secretary as being true and complete copies of the originals thereof
and remaining in full force and effect, not having been modified or rescinded;
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10.4 Borrowers shall have delivered to Bank true, correct and
complete copies of all of the Phase II Debt Documents, and all other documents
and instruments executed and delivered in connection therewith. All of the
documents and instruments referred to in this Section 10 shall be satisfactory
in form and substance to the Bank.
11. Miscellaneous.
11.1 Entire Agreement. The Loan Agreement, as amended by this
First Amendment, and the other Loan Documents embody the entire agreement and
understanding among the Bank and Borrowers. The Loan Agreement, together with
this First Amendment, and all documents executed and delivered in connection
herewith, supersede all prior agreements and understandings relating to subject
matter hereof. This First Amendment together with the Loan Agreement, and the
documents executed and delivered in connection herewith, shall be construed as
one agreement, and in the event of any inconsistency, the provisions of any
promissory note evidencing a portion of the Indebtedness shall control over the
provisions of this First Amendment.
11.2 Counterparts. This First Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same instrument. This First Amendment shall be effective upon the
execution and delivery of a counterpart hereof by each of the parties hereto.
11.3 Captions. The captions or headings in this First
Amendment are for convenience of reference only and in no way define, limit, or
circumscribe the scope or intent of any provision of this First Amendment.
11.4 Successors and Assigns; Governing Law. This First
Amendment shall be binding upon and inure to the benefit of the respective
parties hereto and their successors and assigns and shall be governed by, and
construed and enforced in accordance with, the internal laws of the Commonwealth
of Pennsylvania without regard to its principles of conflicts of laws.
11.5 Confession of Judgment. Borrowers ratify, confirm and
restate the warrants of attorney to confess judgment contained in the various
Loan Documents including, without limitation, those contained in the WC Line
Note and the Equipment Line Note, and each and every other Loan Document
containing any warrant of attorney to confess judgment. Borrowers ratify and
confirm their understanding that by executing documents containing warrants of
attorney to confess judgment against them, they have waived and are again hereby
waiving the right to receive notice or opportunity to defend against the entry
of a judgment against them before the entry of such judgment. These waivers are
knowingly, voluntarily and intelligently made, with the intention of being
legally bound hereby.
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IN WITNESS WHEREOF, intending to be legally bound hereby, the
undersigned have executed this First Amendment as of the day and year first
written above.
UNITED STATES LIME & MINERALS, INC., as
Borrower
By:
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Name:
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Title:
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TEXAS LIME COMPANY, as Borrower
By:
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Name:
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Title:
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ARKANSAS LIME COMPANY, as Borrower
By:
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Name:
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Title:
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NATIONAL CITY BANK, as Bank
By:
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Name:
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Title:
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Exhibit "A"
Copies of Phase II Subordinated Notes
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