THIRD AMENDMENT
TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (the "Amendment") is dated as of August 14,
1998, and entered into by and between BANKAMERICA BUSINESS
CREDIT, INC. ("Lender") and LSB INDUSTRIES, INC. ("Borrower").
WHEREAS, Lender and Borrower have entered into that certain
Amended and Restated Loan and Security Agreement dated as of
November 21, 1997 as amended by that certain First Amendment to
Amended and Restated Loan and Security Agreement dated as of
March 12, 1998, and that certain Second Amendment to Amended and
Restated Loan and Security Agreement dated as of June 30, 1998
(as so amended, the "Agreement");
WHEREAS, two 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 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.
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ARTICLE II
Amendments
Section 2.01. Amendment to Section 3.1(a). Section 3.1(a)
is hereby amended to read as follows:
"3.1 Interest.
(a) Interest Rates. All amounts charged as Revolving
Loans shall bear interest on the unpaid principal amount thereof
from the date made until paid in full in cash at the Applicable
Interest Rate as described in Sections 3.1(a)(i) and (ii) but not
to exceed the maximum rate permitted by applicable law. Subject
to the provisions of Section 3.2, any of the Revolving Loans may
be converted into, or continued as, Reference Rate Loans or
Eurodollar Rate Loans in the manner provided in Section 3.2. If
at any time Revolving Loans are outstanding with respect to which
notice has not been delivered to Lender in accordance with the
terms of this Agreement specifying the basis for determining the
interest rate applicable thereto, then those Revolving Loans
shall be Reference Rate Loans and shall bear interest at a rate
determined by reference to the Reference Rate until notice to the
contrary has been given to the Lender and such notice has become
effective. Except as otherwise provided herein, the amounts
charged as Revolving Loans shall bear interest at the following
rates (the "Applicable Interest Rate"):
(i) For all amounts charged as Revolving Loans
other than Eurodollar Rate Loans, including all Revolving
Loans which are Reference Rate Loans, then at a fluctuating
per annum rate equal to one-half percent (.50%) per annum
(the "Reference Rate Margin") plus the Reference Rate; and
(ii) If the Revolving Loans are Eurodollar Rate
Loans, then at a per annum rate equal to two and seven-
eighths percent (2.875%) per annum (the "Eurodollar Margin")
plus the Eurodollar Rate determined for the applicable
Interest Period.
Each change in the Reference Rate shall be reflected in the
interest rate described in (i) above as of the effective date of
such change. All interest charges shall be computed on the basis
of a year of three hundred sixty (360) days and actual days
elapsed. Except as otherwise provided herein, (1) interest
accrued on each Eurodollar Rate Loan shall be payable in arrears
on each Eurodollar Interest Payment Date applicable to such
Eurodollar Rate Loan, and (2) interest accrued on the Reference
Rate Loans will be payable in arrears on the first day of each
month hereafter."
Section 2.02. Amendment to Section 9.16. Section 9.16 of
the Agreement is hereby amended to read in its entirety as
follows:
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"9.16 LSB Adjusted Tangible Net Worth. The LSB
Adjusted Tangible Net Worth increased by an amount equal to
the purchase price paid by Borrower for its treasury stock
for purchases from January 1, 1998 through termination of
this Agreement, which amount shall not exceed $6,000,000,
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 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Quarter
Fiscal Year Ending
December 31, 1998 $ 43,900,000 $42,900,000
First Fiscal Quarter during
Fiscal Year Ending December 31,
1999 The LSB Adjusted Tangible Net Worth as
of December 31, 1998 less $4,500,000 and
less all Dividends actually paid by LSB
in cash from January 1, 1999 until the
date of calculation.
Second Fiscal Quarter during
Fiscal Year Ending December 31,
1999 The LSB Adjusted Tangible Net Worth as
of March 31, 1999 and less all Dividends
actually paid by LSB in cash from
January 1, 1999 until the date of
calculation.
Third Fiscal Quarter during
Fiscal Year Ending December 31,
1999 and each Fiscal Quarter during
each Fiscal Year ending thereafter: The LSB Adjusted
Tangible Net Worth as of June 30, 1999
plus fifty percent (50%) of the profits
for each fiscal quarter thereafter, if
any, and less all Dividends actually
paid by LSB in cash from January 1, 1999
until the date of calculation."
Section 2.03. Amendment to Section 9.17. Section 9.17 of
the Agreement is hereby amended to read in its entirety as
follows:
"9.17 LSB Debt Ratio. The ratio of Debt of the LSB
Consolidated Borrowing Group to the LSB Adjusted Tangible
Net Worth increased by an amount equal to the purchase price
paid by Borrower for its treasury stock for purchases from
January 1, 1998 through termination of this Agreement, which
amount shall not exceed $6,000,000, 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 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Quarter
Fiscal Year Ending
December 31, 1998 3.75 to 1 3.75 to 1
Fiscal Year Ending
December 31, 1999 3.75 to 1 3.75 to 1 3.75 to 1 3.75 to 1
Each Fiscal Quarter during
each Fiscal Year ending thereafter: 3.75 to 1."
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ARTICLE III
Waivers
Section 3.01. Waiver of Events of Default.
(a) The Lender hereby waives the following Events of
Default: (i) the LSB Borrowing Group's Adjusted Tangible Net
Worth for the Fiscal Quarter ending June 30, 1998 was less than
$45,000,000, in breach of Section 9.16 of the Loan Agreement; and
(ii) the LSB Borrowing Group's Debt Ratio for the Fiscal Quarter
ending June 30, 1998 was greater than 3.70 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 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:
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(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
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 May 31, 1998, 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 & ▇▇▇▇▇▇▇▇▇, 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 furnished 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 Agreement as 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.
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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, and 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
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
any 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 tortious interference with
present or prospective business relationships or of antitrust, or
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(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 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.
IN WITNESS WHEREOF, the parties have executed this Amendment
on the date first above written.
"BORROWER"
LSB INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
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ACKNOWLEDGED AND AGREED TO:
Each of the following "LSB Guarantor Subsidiaries" hereby
acknowledges the execution of and consents to the terms and
conditions of that certain Third Amendment to Amended and Restated
Loan and Security Agreement dated as of August 14, 1998 between LSB
Industries, Inc., and BABC.
L&S AUTOMOTIVE PRODUCTS, CO.
INTERNATIONAL BEARINGS, INC.
LSB EXTRUSION CO.
ROTEX CORPORATION
TRIBONETICS CORPORATION
▇▇▇▇▇ MACHINE TOOL MANUFACTURING
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President acting on behalf of
each of the above.
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CONSENTS AND REAFFIRMATIONS
Each of the undersigned hereby acknowledges the execution of,
and consents to, the terms and conditions of that certain Third
Amendment to Amended and Restated Loan and Security Agreement dated
as of August 14, 1998, between LSB Industries, Inc. and BankAmerica
Business Credit, Inc. ("Creditor") and reaffirms its obligations
under (i) that certain Continuing Guaranty with Security Agreement
(the "Guaranty") dated as of November 21, 1997, and (ii) that
certain Cross-Collateralization and Cross-Guaranty Agreement (the
"Cross-Collateralization Agreement") dated as of November 21, 1997, each made
by the undersigned in favor of the Creditor, and acknowledges and
agrees that the Guaranty and the Cross-Collateralization Agreement
remain in full force and effect and the Guaranty and the Cross-
Collateralization Agreement are hereby ratified and confirmed.
Dated as of August 14, 1998.
LSB INDUSTRIES, INC.
L&S BEARING CO.
SUMMIT MACHINE TOOL MANUFACTURING
CORP.
L&S AUTOMOTIVE PRODUCTS CO.
INTERNATIONAL BEARINGS, INC.
LSB EXTRUSION CO.
ROTEX CORPORATION
TRIBONETICS CORPORATION
▇▇▇▇▇ MACHINERY MANUFACTURING
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
acting on behalf of each of the
above
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