FIRST AMENDMENT
TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (the "Amendment") is dated effective as of
January 1, 2000, and entered into by and between BANK OF
AMERICA, N.A. ("Lender") and LSB INDUSTRIES, INC. ("LSB"), SUMMIT
MACHINE TOOL MANUFACTURING CORP. ("Summit") and ▇▇▇▇▇ MACHINERY
MANUFACTURING CORPORATION ("▇▇▇▇▇") LSB, Summit and ▇▇▇▇▇ being
collectively referred to herein as "Borrower").
WHEREAS, Lender and Borrower have entered into that certain
Second Amended and Restated Loan and Security Agreement dated as
of May 10, 1999 (the "Agreement");
WHEREAS, the Agreement provides that when a "Springing
Covenant Event" (as defined therein) occurs, four financial
covenants become effective; and
WHEREAS, certain affiliates of Borrower identified as the
CCI Borrower Subsidiaries under the Agreement have made an
interest payment under the Bond Indenture on or before December
31, 1999, which has resulted in the occurrence of the Springing
Covenant Event; and
WHEREAS, when the two financial covenants become effective,
Borrower will be in default with respect to each covenant (the
"Financial Covenant Defaults"), and Borrower has requested that
Lender forebear from exercising its rights and remedies as the
result of the Financial Covenant Defaults for a 60-day period;
and
WHEREAS, the Borrower desires that the Lender amend the
Agreement in certain respects and forebear from exercising
certain remedies; and
WHEREAS, the Lender is willing to amend the Agreement and to
grant Borrower's forebearance request 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
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Definitions
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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.
ARTICLE II
__________
Amendments
__________
Section 2.01 The following definitions are hereby amended
in their entirety to read as follows:
"Availability Reductions" means the sum of the
following amounts:
(i) the unpaid balance of outstanding Revolving
Loans at such time;
(ii) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding
Letters of Credit at such time which the
Lender has, or has caused to be, issued or
obtained for any Borrower's account;
(iii) reserves for accrued interest on the
Revolving Loans which is past due;
(iv) the Environmental Compliance Reserve;
(v) the Permanent Reserve; and
(vi) all other reasonable reserves which the
Lender in its reasonable discretion deems
necessary or desirable to maintain with
respect to any Borrower's account, including,
without limitation, any amounts which the
Lender could reasonably be obligated to pay
within a six-month period for the account of
such Borrower.
"Bank" means Bank of America, National Association.
"Maximum Revolving Credit Line" means Fifty Million
Dollars ($50,000,000) less the Gross Availability
Reductions.
Section 2.02 The following new definition is hereby added
to the Agreement:
"Permanent Reserve" means a reserve against
Availability of $5,000,000 which shall remain in effect
until the Termination Date.
Section 2.03 A new Section 9.19 is hereby added to the
Agreement which reads as follows:
"Section 9.19. Minimum Availability.
The LSB Consolidated Borrowing Group shall
maintain at all times unused aggregate
Availability under all of the LSB-Related
Loan Agreements of at least $2,500,000."
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ARTICLE III
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Forebearance Agreement
______________________
Section 3.01. Forebearance. As of this date Borrower has
defaulted under the financial covenants set forth in Sections
9.16 and 9.17 of the Agreement (the "Financial Covenant
Defaults"). Borrower has requested that, with respect to the
Financial Covenant Defaults only, Lender to forebear from
exercising its rights and remedies under the Agreement for a 60-
day period commencing on January 1, 2000, and Lender has agreed
to temporarily forebear from exercising its rights and remedies
solely with respect to the Financial Covenant Defaults for a
period of 60 days or for so long as Lender, in its sole
discretion, deems appropriate. Further, during the 60-day period
of forebearance, Borrower shall not be subject to any default
rate of interest and the Letter of Credit Fee and Swap
Transaction Fee shall not be subject to any increases resulting
from any Event of Default as provided under the Agreement.
ARTICLE IV
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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
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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 October 31,
1999, and except as disclosed to Lender by Borrower
during a meeting between Lender and Borrower on
December 8, 1999, 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.
(c) Forebearance Fee. The CCI Borrower Subsidiaries
shall have paid to Lender a forebearance fee of $150,000,
which shall also be applied to the fees resulting from any
subsequent amendments to the Agreement.
ARTICLE VI
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Miscellaneous
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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.
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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.
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,
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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 (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.
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IN WITNESS WHEREOF, the parties have executed this Amendment
effective the date first above written.
"BORROWER":
LSB INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Title: Board Chairman and President
________________________________
SUMMIT MACHINE TOOL MANUFACTURING CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
Title: Board Chairman
__________________________________
▇▇▇▇▇ MACHINERY MANUFACTURING
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Title: Board Chairman
_________________________________
"LENDER"
BANK OF AMERICA, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
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