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 __________ 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. New Definitions. The following new definitions ________________ are hereby added to the Agreement and read as follows: "Automotive Subsidiaries" means the following LSB _________________________ 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 ___________________________ 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 ________________________ 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 __________ Amendments __________ Section 2.01. Amendment to Section 9.16. Section 9.16 of the ________________________ 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 ________________________________ 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 1st Quarter 2nd Quarter 3rd Quarter 4th 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." -2- 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 _______________ 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 1st Quarter 2nd Quarter 3rd Quarter 4th 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. ________________________________ 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 _____________ 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, 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 -3- 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 -4- 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 & 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. -5- 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 -6- 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/ Tony M. Shelby ______________________________ Tony M. Shelby, Vice President "LENDER" BANKAMERICA BUSINESS CREDIT, INC. By: /s/ Michael J. Jasaitis ________________________________ Michael J. Jasaitis, Vice President -7- 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 MOREY MACHINE TOOL MANUFACTURING CORPORATION By: /s/ Tony M. Shelby _____________________________________ Tony M. Shelby, Vice President acting on behalf of each of the above. -8- 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 MOREY MACHINERY MANUFACTURING CORPORATION By: /s/ Tony M. Shelby ________________________________ Tony M. Shelby, Vice President acting on behalf of each of the above -9-