ELEVENTH AMENDMENT EXHIBIT 4.3
TO
LOAN AND SECURITY AGREEMENT
THIS ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment")
is dated as of October ___, 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, (viii) that certain Eighth Amendment to
Loan and Security Agreement dated as of May 19, 1997, (ix) that certain Ninth
Amendment to Loan and Security Agreement dated as of June 30, 1997, and (x)
that certain Tenth Amendment to Loan and Security Agreement dated as of
September 10, 1997 (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, Borrower has also requested an increase in the Total Credit
Facility to $65,000,000 and additional amendments to the Agreement as
hereinafter set forth;
WHEREAS, the Lender is willing to waive the Events of Default, to
increase the Total Credit Facility, and to 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.
ARTICLE II
Amendments
Section 2.01. Amendment to Definition of "Maximum Revolving Credit
Line". The definition of "Maximum Revolving Credit Line" contained in Section
1.1 of the Agreement is hereby amended in its entirety to read as follows:
"'Maximum Revolving Credit Line' means Sixty-Five Million Dollars
($65,000,000) less the Gross Availability Reductions."
Section 2.02. Amendment to Section 9.16. Section 9.16 of the Agreement
is hereby amended to read in its entirety as follows:
"9.16 Adjusted Tangible Net Worth. Adjusted Tangible Net Worth
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 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Fiscal Year Ending
December 31, 1997 $ 50,300,000
Fiscal Year Ending
December 31, 1998 $ 48,100,000 $ 49,200,000 $49,000,000 $ 48,200,000
Each Fiscal Quarter during each Fiscal Year ending thereafter: $80,400,000"
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 Debt Ratio. The ratio of Debt of the LSB Borrowing Group to
Adjusted Tangible Net Worth 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 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Fiscal Year Ending
December 31, 1997 2.96 to 1
Fiscal Year Ending
December 31, 1998 3.28 to 1 3.15 to 1 3.00 to 1 3.08 to 1
Each Fiscal Quarter during each Fiscal Year ending thereafter: 2.39 to 1."
Section 2.04. Amendment to Section 12. The first sentence
of Section 12 is hereby amended to read as follows:
"The initial term of this Agreement shall be from the
Closing Date until October 1, 1998 (the "Termination
Date")."
All other provisions of Section 12 remain unchanged.
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 September 30, 1997 was less than
$57,400,000, 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, 1997 was greater than 2.52 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:
(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 September 30, 1997, 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 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.
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 (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: ____________________________________
Tony M. Shelby, Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By: _______________________________________
Michael J. Jasaitis, Vice President
CONSENTS AND REAFFIRMATIONS
Each of the undersigned hereby acknowledges the execution
of, and consents to, the terms and conditions of that certain
Eleventh Amendment to Loan and Security Agreement dated as of
October ___, 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 October ___, 1997.
L&S BEARING CO.
SUMMIT MACHINE TOOL MANUFACTURING
CORP.
INTERNATIONAL ENVIRONMENTAL
CORPORATION
CLIMATE MASTER, INC.
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
Eleventh Amendment to Loan and Security Agreement dated as of
October ___, 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 October ___, 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
Eleventh Amendment to Loan and Security Agreement dated as of
October ___, 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 October ___, 1997.
EL DORADO NITROGEN COMPANY
By: ________________________________
Tony M. Shelby, Vice President