FOURTH AMENDMENT
TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (the "Amendment") is dated as of November 19,
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, that certain Second Amendment to Amended and Restated
Loan and Security Agreement dated as of June 30, 1998, and that
certain Third Amendment to Amended and Restated Loan and Security
Agreement dated as of August 14, 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
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Definitions
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Section 1.01. Definitions. Capitalized terms used in this
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Amendment, to the extent not otherwise defined herein, shall have
the same meanings as in the Agreement, as amended hereby.
Section 1.02. New Definitions. The following new definitions
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are hereby added to the Agreement and read as follows:
"Automotive Subsidiaries" means the following LSB
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Guarantor Subsidiaries: L&S Automotive Products Co., LSB Extrusion
Co., International Bearings, Inc., Rotex Corporation, and
Tribonetics Corporation.
"Automotive Termination Date" means the date that LSB
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obtains alternative financing for the Automotive Subsidiaries
in accordance with the provisions of Section 6.16(b) and
indefeasibly repays all Obligations attributable to the Automotive
Subsidiaries.
"Springing Covenant Event" means three consecutive Business
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Days when the aggregate Availability of the LSB Consolidated
Borrowing Group under all of the LSB-Related Loan Agreements is
less than Fifteen Million Dollars ($15,000,000) on each such
Business Day."
ARTICLE II
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Amendments
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Section 2.01. Amendment to Section 9.16. Section 9.16 of the
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Agreement is hereby amended to read in its entirety as follows:
"9.16 At all times (i) prior to the Automotive
Termination Date and (ii) after the Automotive Termination
Date but only if a Springing Covenant Event has occurred
whereafter such financial covenant shall remain in effect
until the termination of this Agreement, the following
financial covenant shall be in effect:
LSB Adjusted Tangible Net Worth. The LSB Adjusted
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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 $34,500,000
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."
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Section 2.02. Amendment to Section 9.17. Section 9.17 of the
_________________________ _____________
Agreement is hereby amended to read in its entirety as follows:
"9.17 At all times (i) prior to the Automotive
Termination Date and (ii) after the Automotive Termination
Date but only if a Springing Covenant Event has occurred
whereafter such financial covenant shall remain in effect
until the termination of this Agreement, the following
financial covenant shall be in effect:
LSB Debt Ratio. The ratio of Debt of the LSB
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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 5.00 to 1
Fiscal Year Ending
December 31, 1999 5.00 to 1 5.00 to 1 5.00 to 1 5.00 to 1
Each Fiscal Quarter during each
Fiscal Year ending thereafter: 5.00 to 1."
Section 2.03. Sale of Automotive Subsidiaries.
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Notwithstanding any provision in the Agreement to the contrary,
Borrower and Lender hereby agree that, unless the Automotive
Termination Date occurs on or before January 15, 1999, Borrower
will pay Lender on January 15, 1999 a fee in the amount of
$250,000, which fee may be charged to Borrower's account as a
Revolving Loan.
ARTICLE III
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Waivers
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Section 3.01. Waiver of Events of Default.
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(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 September 30, 1998 was less than
$43,900,000, in breach of Section 9.16 of the Loan Agreement; and
(ii) the LSB Borrowing Group's Debt Ratio for the Fiscal Quarter
ending September 30, 1998 was greater than 3.75 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
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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
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Ratifications, Representations and Warranties
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Section 4.01. Ratifications. The terms and provisions set
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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
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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
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Section 5.01. Conditions. The effectiveness of this
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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:
(i) Company Certificate. A certificate executed by
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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
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Collateral since September 30, 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
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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.
Section 6.03. Severability. Any provision of this Amendment
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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
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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
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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.
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Section 6.06. Counterparts. This Amendment may be executed
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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
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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
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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
(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
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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
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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
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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 Fourth Amendment to Amended and Restated
Loan and Security Agreement dated as of November 19, 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 Fourth
Amendment to Amended and Restated Loan and Security Agreement dated
as of November 19, 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 November 19, 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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