FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
dated as of November 18, 1996, 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, and (iv) that certain Fourth Amendment to
Loan and Security Agreement dated as of July 1, 1996 (as so amended, the
"Agreement");
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. New Definitions. The following new definitions are
hereby added to the Agreement:
"Fifth Amendment Date" means November 18, 1996.
"First Source Payment" means the final payment in the amount of
$7,500,000 due and owing to First Source under the HCFS Loan Agreement as
defined in the Loan and Security Agreement entered into by and among Lender
and EDC & Slurry.
Section 1.03. Amended Definitions. The definition of "Adjusted
Tangible Assets" is hereby amended to read as follows:
"'Adjusted Tangible Assets' means all of the assets of the
LSB Consolidated Group, on a consolidated basis, except: (a)
goodwill; (b) unamortized debt discount and expense; (c) assets
constituting Intercompany Accounts; (d) fixed assets to the extent
of any write-up in the book value thereof resulting from a
revaluation effective after the Closing Date; and (e) any
intangibles, as determined in accordance with GAAP."
ARTICLE II
Amendments
Section 2.01. Amendment to Section 3.1(a) of the Agreement. Subsections
(i) and (ii) of Section 3.1(a) of the Agreement are hereby amended to read in
their entirety as follows:
"(i) For all amounts charged as Revolving Loans other than
Eurodollar Rate Loans, including all Revolving Loans which are Reference
Rate Loans, then at a fluctuating per annum rate equal to two percent
(2%) per annum (the "Reference Rate Margin") plus the Reference Rate;
and
(ii) If the Revolving Loans are Eurodollar Rate Loans, then at a
per annum rate equal to: four and three-eighths percent (4.375%) per
annum (the "Eurodollar Margin") plus the Eurodollar Rate determined for
the applicable Interest Period.
Notwithstanding the foregoing, if the LSB Borrowing Group has, during
any month, a combined average excess Availability of at least (a)
$13,300,000 (prior to making the First Source Payment, or (b) $6,300,000
after making the First Source Payment, then, during the following month,
the Reference Rate Margin and the Eurodollar Margin will be reduced by
one-half of one percent (.50%).
In addition, if Adjusted Tangible Net Worth equals or exceeds
$72,500,000, as reflected on Borrower's most current quarterly Financial
Statements, provided no Event of Default has occurred and is continuing,
then for so long as Adjusted Tangible Net Worth is at least $72,500,000,
both the Reference Rate Margin and the Eurodollar Margin with respect to
the Revolving Loans will be reduced by an additional one-half of one
percent (.50%), and the reduction will be effective as of the first day
of the month following receipt by Lender of the applicable quarterly
Financial Statements.
Finally, if Adjusted Tangible Net Worth equals or exceeds $84,000,000,
as reflected on Borrower's most current quarterly Financial Statements,
provided no Event of Default has occurred and is continuing, then for so
long as Adjusted Tangible Net Worth is at least $84,000,000, both the
Reference Rate Margin and the Eurodollar Margin with respect to the
Revolving Loans will be reduced by an additional one-half of one percent
(.50%), and the reduction will be effective as of the first day of the
month following receipt by Lender of the applicable quarterly Financial
Statements.
Each change in the Reference Rate shall be reflected in the interest
rate described in (i) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of three hundred
sixty (360) days and actual days elapsed. Except as otherwise provided
herein, (1) interest accrued on each Eurodollar Rate Loan shall be payable in
arrears on each Eurodollar Interest Payment Date applicable to such Eurodollar
Rate Loan and upon payment thereof in full, and (2) interest accrued on the
Reference Rate Loans will be payable in arrears on the first day of each month
hereafter.
The remaining provisions of Sectiono 3.1(a) are unchanged.
Section 2.02. Amendment to Section 9.15. Section 9.15 of the
Agreement is hereby amended to read in its entirety as follows:
"9.15 Capital Expenditures. Borrower shall not make or incur any
Capital Expenditure if, after giving effect thereto, the aggregate
amount of all Capital Expenditures by the LSB Borrowing Group during the
following periods would exceed the following amounts: Fiscal Year
ending December 31, 1996; $11,000,000; Fiscal Year ending December 31,
1997 and each Fiscal Year thereafter: $6,000,000."
Section 2.03. 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 0xx Xxxxxxx 0xx Xxxxxxx 0xx Xxxxxxx 0xx Quarter
----------- ---------- ----------- -----------
Fiscal Year Ending
December 31, 1996 $66,000,000 $64,500,000
Fiscal Year Ending
December 31, 1997 $64,500,000 $66,300,000 $67,300,000 $68,300,000
Each Fiscal Quarter during each Fiscal Year ending thereafter: $80,400,000
Section 2.04. 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 0xx Xxxxxxx 0xx Xxxxxxx 0xx Xxxxxxx 0xx Quarter
----------- ----------- ----------- -----------
Fiscal Year Ending
December 31, 1996 2.39 to 1 2.39 to 1
Fiscal Year Ending
December 31, 1997 2.39 to 1 2.39 to 1 2.39 to 1 2.39 to 1
Each Fiscal Quarter during each Fiscal Year ending thereafter: 2.39 to 1."
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 & Xxxxxxxxx, 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: Xxxx X. Xxxxxx
Title: Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By:
Name: Xxxxxxx X. Xxxxxxxx
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 Fifth Amendment to Loan and
Security Agreement dated as of November 18, 1996, 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 November 18, 1996.
INTERNATIONAL ENVIRONMENTAL CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
CLIMATE MASTER, INC.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
SUMMIT MACHINE TOOL MANUFACTURING CORP.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
L&S BEARING CO.
By:
Name: Xxxx X. Xxxxxx
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 Fifth Amendment to Loan and
Security Agreement dated as of November 18, 1996, 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 November 18, 1996.
UNIVERSAL TECH CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
LSB CHEMICAL CORP.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
L&S AUTOMOTIVE PRODUCTS CO.
(f/k/a LSB Bearing Corp.)
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
INTERNATIONAL BEARINGS, INC.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
LSB EXTRUSION CO.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
ROTEX CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
TRIBONETICS CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
SUMMIT MACHINE TOOL SYSTEMS, INC.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
HERCULES ENERGY MFG. CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXX MACHINERY MANUFACTURING
CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
CHP CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
KOAX CORP.
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
APR CORPORATION
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
