FIFTH AMENDMENT
TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Amendment") is dated as of April 8, 1999, and
entered into by and between BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (successor-in-interest to 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,
that certain Third Amendment to Amended and Restated Loan and
Security Agreement dated as of August 14, 1998, and that certain
Fourth Amendment to Amended and Restated Loan and Security
Agreement dated as of November 19, 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. Amendment to Name of Lender. Effective as of
April 1, 1999 Bank of America National Trust and Savings
Association became the successor-in-interest to Bank America
Business Credit, Inc. All references in the Agreement and in each
Loan Document to "BankAmerica Business Credit, Inc." or "BABC" are
now amended to refer to "Bank of America National Trust and Savings
Association" which is the "Lender" under the Agreement and the
other Loan Documents.
Section 1.03. New Definition. The following definition is
hereby added to the Agreement:
"Early Termination Fee" means a single fee of $500,000
which shall be jointly and severally due and owing from the
LSB Consolidated Borrowing Group if, prior to December 31,
2000, any of the LSB-Related Loan Agreements are terminated
other than in accordance with their terms.
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 1st 2nd 3rd 4th
Following Fiscal Years Quarter Quarter Quarter Quarter
______________________ ________ _______ _______ ________
Fiscal Quarter during
Fiscal Year Ending
December 31, 1999: $21,300,000 $23,600,000 $24,000,000 $23,500,000
First Fiscal Quarter The LSB Adjusted Tangible Net Worth as of
during Fiscal Year December 31, 1999 less $4,500,000 and less all
Ending December 31, dividends paid by LSB in cash from January 1,
2000: 2000 until the date of calculation.
Second Fiscal Quarter The LSB Adjusted Tangible Net Worth as of March
during Fiscal Year 31, 2000 plus fifty percent (50%) of the profits
Ending December 31, for the fiscal quarter then ending, if any, with
2000: no deductions for losses, less all dividends
paid by LSB in cash from January 1, 2000 until
the date of calculation.
Third Fiscal Quarter The LSB Adjusted Tangible Net Worth as of June
during Fiscal Year 30, 2000 plus fifty percent (50%) of the profits
Ending December 31, for the fiscal quarter then ending, if any, with
2000 and each Fiscal no deductions for losses, less all dividends
Quarter during each paid by LSB in cash from January 1, 2000 until
Fiscal Year ending the date of calculation.
thereafter
Section 2.02. Amendment to Section 9.17. Section 9.17 of the
Agreement is hereby amended to read in its entirety as follows:
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"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 1st 2nd 3rd 4th
Following Fiscal Years Quarter Quarter Quarter Quarter
______________________ _______ _______ _______ _______
Fiscal Year Ending
December 31, 1999 9.3:1 8.4:1 8.1:1 8.1:1
Fiscal Year Ending
December 31, 2000 8.1:1 8.1:1 8.1:1 8.1:1
Each Fiscal Quarter during each Fiscal Year ending thereafter: 8.1:1
Section 2.03. Amendment to Article 12 of the Agreement.
Article 12 of the Agreement is hereby amended to read in its
entirety as follows:
"12. TERM AND TERMINATION. The term of this Agreement
shall extend until December 31, 2000 (the "Termination Date").
This Agreement shall automatically be renewed thereafter for
successive terms of thirteen (13) months each, unless this
Agreement is terminated as provided below. The Lender and the
Borrower shall each have the right to terminate this
Agreement, without premium or penalty, (i) at the end of the
initial term or at the end of any renewal term by giving the
other written notice not less than sixty (60) days prior to
the end of such term by registered or certified mail, or (ii)
as provided in Section 6.16. The Borrower may also terminate
this Agreement at any time during its initial term or any
renewal periods if: (a) it gives the Lender sixty (60) days
prior written notice of termination by registered or certified
mail; (b) it pays all Revolving Loans and reimburses Lender
for all Letter of Credit obligations under this Agreement on
or prior to the effective date of termination; and (c) except
as otherwise provided herein, it pays the Lender, on or prior
to the effective date of termination, the Early Termination
Fee if such termination is made prior to the Termination Date.
The Lender may also terminate this Agreement without notice
upon an Event of Default that has not been cured or otherwise
waived to Lender's satisfaction. Upon the effective date of
termination of this Agreement for any reason whatsoever, all
Obligations shall become immediately due and payable.
Notwithstanding the termination of this Agreement, until all
Obligations are paid and performed in full, the Lender shall
retain all its rights and remedies hereunder (including,
without limitation, in all then existing and after-arising
Collateral) except as otherwise provided in Section 6.16 of
this Agreement."
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ARTICLE III
Waivers
Section 3.01. Waiver of Events of Default.
(a) The Lender hereby waives the following Events of
Default: (i) the LSB Consolidated Borrowing Group's Adjusted
Tangible Net Worth for the Fiscal Quarter ending December 31, 1998
was less than $34,500,000, in breach of Section 9.16 of the Loan
Agreement; and (ii) the LSB Consolidated Borrowing Group's Debt
Ratio for the Fiscal Quarter ending December 31, 1998 was greater
than 5.00 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):
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(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 January 31, 1999,
and the Lender shall have received a certificate of
Borrower's chief executive officer to such effect;
(iii) Other Documents. Borrower shall agree to
execute and deliver such other documents and instruments
including, but not limited to, UCC assignments reflecting
"Bank of America National Trust and Savings Association"
as assignee, as well as such 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.
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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, including, but not limited to, those
relating to (a) usury or penalties or damages therefor, (b)
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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: /s/ Tony M. Shelby
_________________________________
Tony M. Shelby, Vice President
"LENDER"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Michael J. Jasaitis
___________________________________
Michael J. Jasaitis, 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 Fifth
Amendment to Amended and Restated Loan and Security Agreement dated as of
April 8, 1999 between LSB Industries, Inc., and Lender.
MOREY MACHINE TOOL MANUFACTURING
CORPORATION
By: /s/ Tony M. Shelby
____________________________________
Tony M. Shelby,
Vice President acting on behalf of
each of the above.
L&S AUTOMOTIVE PRODUCTS, CO.
LSB EXTRUSION CO.
INTERNATIONAL BEARINGS, INC.
ROTEX CORPORATION
TRIBONETICS CORPORATION
By: /s/ David R. Goss
_____________________________________
David R. Goss,
Vice Chairman 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 Fifth
Amendment to Amended and Restated Loan and Security Agreement dated
as of April 8, 1999, between LSB Industries, Inc. and Bank of
America National Trust and Savings Association ("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 April 8, 1999.
LSB INDUSTRIES, INC.
SUMMIT MACHINE TOOL MANUFACTURING
CORP.
MOREY MACHINERY MANUFACTURING
CORPORATION
By: /s/ Tony M. Shelby
______________________________
Tony M. Shelby, Vice President
acting on behalf of each of
the above
L&S BEARING CO.
L&S AUTOMOTIVE PRODUCTS CO.
INTERNATIONAL BEARINGS, INC.
LSB EXTRUSION CO.
ROTEX CORPORATION
TRIBONETICS CORPORATION
By: /s/ David R. Goss
_______________________________
David R. Goss, Vice Chairman
acting on behalf of each of
the above
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