FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
dated as of July 1, 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, and (iii) that certain Third Amendment to Loan and Security
Agreement dated as of April 1, 1996 (as so amended, the "Agreement");
WHEREAS, El Dorado Chemical Company ("EDC") and Slurry Explosive
Corporation ("Slurry"), who are Affiliates of Borrower and are part of the LSB
Borrowing Group, as defined in the Agreement, have requested that Lender make
a term loan to EDC and Slurry of even date herewith in principle amount of
$10,000,000 (the "Term Loan") the terms of which are set forth in that certain
Term Note dated of even date herewith executed by EDC and Slurry and payable
to the order of Lender (the "Term Note");
WHEREAS, Lender has agreed to make the Term Loan and to thereby extend
the total credit facility available to the LSB Borrowing Group to $75,000,000,
until such time as the Term Loan has been repaid in full, whereupon the total
credit facility will once again be limited to the Maximum Revolving Credit
Line;
WHEREAS, EDC intends to enter into a leasing/financing transaction with
Security Pacific Leasing Corporation ("SPLC") on or before August 15, 1996
(the "SPLC Transaction") whereby SPLC will make certain periodic advances to
EDC and Slurry, the first such advance to be in the amount of $12,000,000 (the
"Initial SPLC Advance"); and
WHEREAS, the Initial SPLC Advance will be used in part to repay in
full the Term Loan;
WHEREAS, Lender and Borrower desire to further 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:
"Fourth Amendment Date" means July 1, 1996.
"Initial SPLC Advance" means the first advance in the amount of
$12,000,000 under the SPLC Transaction.
"Maximum Credit Facility" means the Maximum Revolving Credit Line plus
the Term Loan.
"SPLC Transaction" means the leasing/financing transaction to be entered
into by and between EDC and Security Pacific Leasing Corporation on or before
August 15, 1996.
"Term Loan" means the Term Loan made by Lender to EDC and Slurry of even
date herewith in the principal amount of $10,000,000.
"Term Note" means that certain Term Note dated of even date herewith
executed by EDC and Slurry in the principal amount of $10,000,000 and payable
to the order of Lender.
Section 1.03. Amended Definition. The definition of Maximum Revolving
Credit Line is hereby amended to read as follows:
"Maximum Revolving Credit Line" means Sixty-Five Million Dollars
($65,000,000) less the Xxxx Availability Reductions; provided, however, that
following the making of the Initial SPLC Advance, Maximum Revolving Credit
Line shall mean Sixty-Three Million Dollars ($63,000,000) less the Gross
Availability Reductions."
ARTICLE II
Amendments
Section 2.01. Amendment to Article 2. Article 2 of the Agreement is
hereby amended by adding a new Section 2.4 which reads as follows:
"2.4. Term Loan. The Lender has, of even date herewith, made available
to EDC and Slurry a Term Loan in the principal amount of $10,000,000, the
terms and conditions of which are set forth in the Term Note."
Section 2.02. Amendment to Section 3.1(a). Section 3.1(a) of the
Agreement is hereby amended by adding a new subsection (iii) which reads as
follows:
"(iii) The Term Loan shall bear interest at the Reference Rate plus
three percent (3%)."
Section 2.03. 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: $9,000,000; Fiscal Year ending December 31, 1997 and each Fiscal Year
thereafter: $6,000,000."
Section 2.04. 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
(without taking into account any purchases of treasury stock) 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 $78,000,000(1) $76,400,000 $77,400,000 $77,400,000
Fiscal Year Ending
December 31, 1997 $77,400,000 $78,400,000 $79,400,000 $80,400,000
Each Fiscal Quarter during each Fiscal Year ending thereafter: $80,400,000(1)
(1) This number is to be reduced by the amount of any purchase of
treasury stock by LSB pursuant to Section 9.14 of the Loan and Security
Agreement between LSB and the Lender and by the purchase of Treasury Stock in
the amount of $885,000 in October and November, 1994."
Section 2.05. 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
(excluding all loans to any Borrower Subsidiary from the Lender) 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:
A. If the SPLC Transaction has not yet taken place or has taken
place and EDC and Slurry have received $12,000,000 as a result:
Fiscal Quarters in the
Following Fiscal Years 0xx Xxxxxxx 0xx Xxxxxxx 0xx Xxxxxxx 0xx Quarter
Fiscal Year Ending
December 31, 1996 .95 to 1 .95 to 1 .90 to 1
Fiscal Year Ending
December 31, 1997 .90 to 1 .90 to 1 .90 to 1 .90 to 1
Each Fiscal Quarter during each
Fiscal Year ending thereafter: .90 to 1."
B. If the SPLC Transaction has taken place and EDC and Slurry
have received $45,000,000 as a result:
Fiscal Quarters in the
Following Fiscal Years 0xx Xxxxxxx 0xx Xxxxxxx 0xx Xxxxxxx 0xx Quarter
Fiscal Year Ending
December 31, 1996 .95 to 1 1.40 to 1 1.35 to 1
Fiscal Year Ending
December 31, 1997 1.35 to 1 1.35 to 1 1.35 to 1 1.35 to 1
Each Fiscal Quarter during each
Fiscal Year ending thereafter: 1.35 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) Term Note. The Term Note executed by EDC and Slurry in the
original principal amount of $10,000,000 payable to the order of Lender;
(iii) Guaranty. Continuing Guaranty with Security Agreement executed by
Northwest Financial Corporation in favor of Lender guaranteeing all Loans
under the Agreement and granting to Lender a security interest in Northwest
Financial Corporation's equipment and the products and proceeds thereof;
(iv) Deed of Trust. A Deed of Trust dated of even date herewith
executed by Northwest Financial Corporation and granting to Lender a lien on
certain real property located in Union County, Arkansas.
(v) 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;
(vi) 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.
(c) Borrower and the other Borrower Subsidiaries shall have
collectively paid to Lender on the Fourth Amendment Date an amendment fee of
$100,000.
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 he 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 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) usuary
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: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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 Fourth Amendment to Loan and
Security Agreement dated as of July 1, 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 July 1, 1996.
INTERNATIONAL ENVIRONMENTAL
CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
LSB INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
CLIMATE MASTER, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
SUMMIT MACHINE TOOL
MANUFACTURING CORP.
By: /s/ Xxxx X. Xxxxxx
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 Fourth Amendment to Loan and
Security Agreement dated as of July 1, 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 July 1, 1996.
UNIVERSAL TECH CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
LSB INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
L&S AUTOMOTIVE PRODUCTS CO.
(f/k/a/ LSB Bearing Corp.)
INTERNATIONAL BEARINGS, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
LSB EXTRUSIONS CO.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
ROTEX CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
TRIBONETICS CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
SUMMIT MACHINE TOOL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
HERCULES ENERGY MFG. CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXX MACHINERY MANUFACTURING
CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
CHP CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
KOAX CORP.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
APR CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
