Exhibit 4.1
NINTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
dated as of June 30, 1997, 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 Loan and
Security Agreement dated December 12, 1994, as amended by (i) that certain
First Amendment to Loan and Security Agreement dated as of August 17, 1995,
(ii) that certain Second Amendment to Loan and Security Agreement dated as of
December 1, 1995, (iii) that certain Third Amendment to Loan and Security
Agreement dated as of April 1, 1996, (iv) that certain Fourth Amendment to
Loan and Security Agreement dated as of July 1, 1996, (v) that certain Fifth
Amendment to Loan and Security Agreement dated as of November 18, 1996, (vi)
that certain Sixth Amendment to Loan and Security Agreement dated as of
February 13, 1997, (vii) that certain Seventh Amendment to Loan and Security
Agreement dated as of April 11, 1997, and (viii) that certain Eighth Amendment
to Loan and Security Agreement dated as of May 19, 1997 (as so amended, the
"Agreement");
WHEREAS, under the Seventh Amendment Lender agreed to arrange for
certain Swap Transactions to be provided by Bank to each member of the LSB
Borrowing Group, with appropriate Availability Reserves to be established
accordingly; and
WHEREAS, El Dorado Chemical Company ("EDC"), which is a member of the
LSB Borrowing Group, has a wholly-owned Subsidiary, El Dorado Nitrogen Company
("EDNC"); and
WHEREAS, EDNC has agreed to construct a nitric acid production facility
in Baytown, Texas that will be subject to a lease from Security Pacific
Leasing Corporation through a trustee to EDNC; and
WHEREAS, EDNC shall pay Security Pacific Leasing Corporation s trustee
approximately $60,000,000 in lease payments (the "Lease Price") over a period
of time commencing in September, 1998, and EDC wishes to lock-in on an
interest rate with respect to $50,000,000 of the Lease Price by means of the
Swap Transactions; and
WHEREAS, Lender, EDC, and each member of the LSB Borrowing Group,
including Borrower, have agreed that only EDC will enter into Swap
Transactions directly with Bank, for which Lender will agree to indemnify
Bank, but each member of the LSB Borrowing Group, including Borrower, has
agreed to indemnify Lender for any liability that Lender owes to Bank
resulting from the Swap Transactions; and
WHEREAS, Lender and Borrower desire to amend the Agreement as
hereinafter set forth;
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.
Section 1.02. Amendment to Definition of Availability Reductions. The
definition of "Availability Reductions" is hereby amended by deleting in its
entirety subsection (vi).
All other subsections of the definition remain unchanged.
Section 1.03. Amendment to Definition of Obligations. The
definition of "Obligations" is amended in its entirety to read as follows:
" Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debts owing by Borrower to
Lender arising under this Agreement or any other Loan Document, whether or not
evidenced by any note, or other instrument or document, whether arising from
an extension of credit, opening of a letter of credit, loan, guaranty,
indemnification (including any indemnity to Bank by Lender in connection with
the Swap Transactions or otherwise), whether direct or indirect (including,
without limitation, those acquired by assignment from others relating to the
SWAP Transactions, and any participation by Lender in Borrower's debts owing
to others relating to the SWAP Transactions), absolute or contingent, due or
to become due, primary or secondary, as principal or guarantor, and including,
without limitation, all interest, charges, expenses, fees, attorneys' fees,
filing fees and any other sums chargeable to Borrower or either of them,
hereunder or under another Loan Document, or under any other agreement or
instrument with Lender relating to the SWAP Transactions. "Obligations"
includes, without limitation, (a) all debts, liabilities, and obligations now
or hereafter owing from Borrower, to Lender under or in connection with the
Letters of Credit and the Letter of Credit Agreement, and (b) all debts,
liabilities, and obligations now or hereafter owing from Borrower to the
Lender arising from or related to Swap Transactions."
Section 1.04. Amendment to Definition of Swap Transactions. The
definition of "Swap Transactions" is amended in its entirety to read as
follows:
"Swap Transactions" means interest rate swaps, treasury locks, and all
other forward rate agreements entered into by the Bank for the account of or
otherwise for the benefit of EDC.
Section 1.05. New Definition. The following definition is hereby
added to Article I of the Agreement:
" EDC means El Dorado Chemical Company, an Oklahoma corporation and a
member of the LSB Borrowing Group."
ARTICLE II
Amendments
Section 2.01. Amendment to Section 2.5 of Article 2. Section 2.5 of
Article 2 of the Agreement is hereby amended to read as follows:
"2.5. Swap Transactions. EDC may request and the Lender may, in its
sole and absolute discretion, arrange for EDC to obtain Swap Transactions from
the Bank in amounts to be agreed to between EDC and Bank. Borrower agrees to
indemnify and hold the Lender harmless from any and all obligations now or
hereafter owing by the Lender to the Bank arising from or related to such Swap
Transactions pursuant to the indemnity referred to in clause (c) below. EDC
agrees to pay the Bank all amounts owing to the Bank pursuant to the Swap
Transactions. In the event EDC shall not have paid to the Bank such amounts,
the Lender shall pay the Bank and such amounts when paid by the Lender shall
constitute a Revolving Loan of EDC which shall be deemed to have been
requested by EDC. EDC acknowledges and agrees that the obtaining of Swap
Transactions from the Bank (a) is in the sole and absolute discretion of the
Bank, (b) is subject to all rules and regulations of the Bank, and (c) is due
to the Bank relying on the indemnity of the Lender to the Bank by Borrower
with respect to the obligations of EDC to the Bank in connection with the Swap
Transactions."
ARTICLE III
Ratifications, Representations and Warranties
Section 3.01. 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 3.02. 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 IV
Conditions Precedent
Section 4.01. 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:
(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, 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 & Gilchrist, a Professional Corporation.
ARTICLE V
Miscellaneous
Section 5.01. 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 5.02. 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 5.03. 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 5.04. 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 5.05. 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 5.06. 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 5.07. 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 5.08. Headings. The headings, captions and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.09. 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 (f) slander, libel or damage to reputation, (hereinafter being
collectively referred to as the "Claims"), all of which Claims are hereby
waived.
Section 5.10. 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 5.11. 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:___________________________
Name: Tony M. Shelby
Title: Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By:____________________________
Name: Michael J. Jasaitis
Title: Vice President
CONSENTS AND REAFFIRMATIONS
Each of the undersigned hereby acknowledges the execution of, and
consents to, the terms and conditions of that certain Ninth Amendment to Loan
and Security Agreement dated as of June 30, 1997, between LSB Industries, Inc.
and BankAmerica Business Credit, Inc. ("Creditor") and reaffirms its
obligations under that certain Cross-Collateralization and Cross-Guaranty
Agreement (the Cross-Collateralization Agreement ) dated as of December 12,
1994, made by the undersigned in favor of the Creditor, and acknowledges and
agrees that the Cross-Collateralization Agreement remains in full force and
effect and the Cross-Collateralization Agreement is hereby ratified and
confirmed.
Dated as of June 30, 1997.
CLIMATE MASTER, INC.
SUMMIT MACHINE TOOL
MANUFACTURING CORP.
INTERNATIONAL ENVIRONMENTAL
CORPORATION
L & S BEARING CO.
By:__________________________________________
Tony M. Shelby, Vice President acting on
behalf of each of the above
CONSENTS AND REAFFIRMATIONS
Each of the undersigned hereby acknowledges the execution of, and consents
to, the terms and conditions of that certain Ninth Amendment to Loan and
Security Agreement dated as of June 30, 1997, 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 December 12, 1994, and (ii) that certain
Cross-Collateralization and Cross-Guaranty Agreement (the Cross-
Collateralization Agreement ) dated as of December 12, 1994, 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 June 30, 1997.
UNIVERSAL TECH CORPORATION
LSB CHEMICAL CORP.
L&S AUTOMOTIVE PRODUCTS CO.
(f/k/a LSB Bearing Corp.)
INTERNATIONAL BEARINGS, INC.
LSB EXTRUSION CO.
ROTEX CORPORATION
TRIBONETICS CORPORATION
SUMMIT MACHINE TOOL SYSTEMS, INC.
HERCULES ENERGY MFG. CORPORATION
MOREY MACHINERY MANUFACTURING
CORPORATION
CHP CORPORATION
KOAX CORP.
APR CORPORATION
By: ________________________________________
Tony M. Shelby, Vice President acting on
behalf of each of the above
CONSENTS AND REAFFIRMATIONS
El Dorado Nitrogen Company hereby acknowledges the execution of, and
consents to, the terms and conditions of that certain Ninth Amendment to Loan
and Security Agreement dated as of June 30, 1997, between LSB Industries,
Inc. and BankAmerica Business Credit, Inc. ("Creditor") and reaffirms
its obligations under that certain Continuing Guaranty with
Security Agreement (as amended, the "Guaranty") dated as of February 13,
1997, made by the undersigned in favor of the Creditor, and acknowledges and
agrees that the Guaranty remains in full force and effect and the Guaranty
is hereby ratified and confirmed.
Dated as of June 30, 1997.
EL DORADO NITROGEN COMPANY
By: ______________________________
Tony M. Shelby, Vice President