SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is executed effective the 8th day of November, 2001, between SBL CORPORATION, an Oklahoma corporation, having a notice address at Xxxx Xxxxxx Xxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (the "Debtor"), and STILLWATER NATIONAL BANK AND TRUST COMPANY, N.A., having a notice address at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (the "Secured Party").
W I T N E S S E T H :
WHEREAS, the Debtor and the other parties identified below (together with the Debtor, the "Borrowers"), are currently indebted to the Secured Party as evidenced by the promissory notes described below (the "Notes"):
|
Borrower |
Note No. |
Note Date |
Original Principal Amount |
| SBL Corporation | 37516 | 10-16-97 | $1,985,508 |
| Xxxxxx X. Xxxxxx 1992 Trust |
37517 | 10-16-97 | $140,532 |
| Xxxxxx X. Xxxxxx 1992 Trust |
37518 | 10-16-97 | $139,680 |
| Xxxx X. Xxxxxxxxx #J-1 Trust |
37519 | 10-16-97 | $71,776 |
| Xxxxx X. Xxxxxxxxx #J-1 Trust |
37520 | 10-16-97 | $71,776 |
| Xxx X. Xxxxxxxxx #J-1 Trust |
37521 | 10-16-97 | $73,908 |
| Xxxx X. Xxxxxx #J-1 Trust |
37522 | 10-16-97 | $71,776 |
| Xxxxxxxx X. Xxxxxx #J-1 Trust |
37523 | 10-16-97 | $71,776 |
| Xxxxx X. Xxxxxx 1992 Trust |
37524 | 10-16-97 | $149,680 |
| Xxxxx X. Xxxxxxxxx 1992 Trust |
37525 | 10-16-97 | $149,680 |
| Xxxxxx X. Xxxxxx #J-1 Trust |
37526 | 10-16-97 | $73,908 |
SECURITY AGREEMENT
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WHEREAS, the Debtor has agreed to secure payment of the Notes and other indebtedness described herein by granting the Secured Party a security interest covering certain assets of the Debtor.
NOW, THEREFORE, (i) for and in consideration of the premises and the agreements herein contained; and (ii) for other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged, the Debtor hereby agrees with the Secured Party as follows:
1. Definitions. Unless otherwise defined herein, all terms used herein which are defined in the Oklahoma Uniform Commercial Code (the "UCC") will have the same meanings herein unless the context otherwise requires. The documents contemplated in this Agreement and the Notes are collectively referred to herein as the "Loan Documents."
2. Security Interest. The Debtor hereby grants to the Secured Party a first and prior security interest in, an assignment of, a general lien upon and a right of set-off against the following described property (the "Collateral"): (a) one million (1,000,000) shares of preferred stock, designated as Series D 6% Cumulative, Convertible Class C Preferred Stock (the "Stock"), of LSB Industries, Inc., a Delaware corporation ("LSB"), owned by the Debtor and represented by LSB Certificate No. 1, together with all additions and substitutions of shares of the Stock or certificates, together with all of the Debtor's interest and rights in the Stock, whether now owned or hereafter acquired, all cash and stock dividends attributable to the Stock, all increases relating to the Stock as a result of stock splits, mergers or any other reorganization, all monies and claims for monies due and to become due to the Debtor as dividends or arising under accounts, contracts, agreements and general intangibles relating to the Stock and all proceeds and products thereof; and (b) all of the Debtor's right, title and interest in and to that certain Promissory Note dated October 18, 2001, executed by Prime Financial Corporation, an Oklahoma corporation ("PFC"), in the original principal amount of Three Hundred Fifty Thousand Dollars ($350,000.00) (the "PFC Note"), and all additions and accessions to, replacements of, substitutions for, payments thereon and proceeds therefrom. This Agreement is intended for security only and is to secure the obligations of the Borrowers owing to the Secured Party as herein described. It is understood that the Secured Party does not hereby assume any of the obligations of the Debtor in connection with the Collateral.
2.1 Voting Rights. Absent an event of default (hereinafter defined in paragraph
6) under
this Agreement or the Loan Documents that has not been cured, the
Debtor will
retain all voting rights with respect to the Stock. On or after the
occurrence of an
event of default and without further notice to the Debtor, the
Secured Party will
have the right to exercise all voting rights, all conversion,
exchange, subscription
and other rights pertaining to the Stock, whether or
not the Stock has been
registered in the Secured Party's name. The Debtor
hereby appoints the Secured
Party as the Debtor's lawful attorney-in-fact and
proxy to exercise the foregoing
rights after the occurrence of an event of
default. The Debtor agrees that the
foregoing proxy is coupled with an
interest and is irrevocable.
2.2 Cash Dividends. Absent an event of default that has not been cured, the
Debtor
will have the right to receive and retain for the Debtor's use all cash
dividends paid
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on the Stock. On or after the occurrence of an event of default
and without further
notice to the Debtor the Secured Party will have the right
to receive such cash
dividends and to apply the same toward satisfaction of
the indebtedness hereby
secured or hold the same as part of the Collateral
under this Agreement.
2.3 Stock Dividends. In the event any stock dividends are paid on the Stock, or
if any
stock or other securities are delivered to the Debtor in connection with
any stock
split, merger or reorganization affecting the Stock, the Debtor will
immediately
deliver to the Secured Party the certificates representing such
stock dividends,
other stock or securities, together with executed
endorsements or appropriate
powers. Any such stock dividend, other stock
or securities will be held by the
Secured Party as part of the Collateral under
the terms of this Agreement, provided
that the Debtor will retain all rights
with respect to the Collateral as provided in
paragraphs 2.1 and 2.2 of this
Agreement.
3. Secured Indebtedness. The security interest granted hereby in the Collateral is given to secure the Borrowers' payment of: (a) the Notes; (b) all extensions, renewals, amendments, modifications, substitutions and changes in form to the Notes; (c) all costs and expenses incurred in connection with the collection of the Notes and enforcement of the Secured Party's rights under the Loan Documents, including attorneys' fees and expenses; (d) all future advances by the Secured Party to the Borrowers under the Notes; (e) all other liabilities of the Borrowers to the Secured Party (whether primary, secondary, direct or indirect, absolute or contingent, sole, joint or several) due or to become due however evidenced or acquired; and (f) performance of the agreements herein set forth (the foregoing items (a) through (f) are collectively referred to herein as the "Secured Indebtedness").
4. Debtor's Agreements. Until payment in full of the Notes, the Debtor will perform or cause to be performed the following agreements:
4.1 Possession of Collateral. The Debtor agrees to deliver the Collateral to the
Secured
Party, appropriately endorsed to the Secured Party or with stock
powers in form
and substance satisfactory to the Secured Party in favor of the
Secured Party. The
Debtor will provide the name and address of the stock
transfer agent to the Secured
Party. Regardless of the form of any
endorsement to the Secured Party, the Debtor
waives presentment, demand,
notice of dishonor, protest, notice of protest and all
other notices with respect
thereto.
4.2 Additional Documents. The Debtor agrees to execute and deliver any
documents
which are necessary in the judgment of the Secured Party to
obtain, maintain and
perfect a security interest under this Agreement and to
enable the Secured Party to
comply with any federal or state law to obtain or
perfect the Secured Party's security
interest in the Collateral.
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4.3 Creation of Liens. The Debtor will not create, assume or suffer to exist any
claim,
pledge, security interest, encumbrance or other lien (including the lien
of an
attachment,
judgment or execution) affecting any or all of the
Collateral,
excluding only liens held by the Secured Party.
5. Debtor's Representations and Covenants. The Debtor hereby warrants, represents and agrees as follows:
5.1 PFC Note. The unpaid principal balance of the PFC Note plus all accrued
unpaid
interest as of the effective date of this Agreement is
$____________________.
5.2 Principal Place of Business. The Debtor's principal place of business is in the
State
of Oklahoma.
5.3 Title. The Debtor has absolute title to the Collateral free and clear of all
liens,
encumbrances and security interests except for the security interest
hereby granted to
the Secured Party and such other rights, if any, of the
Secured Party, and the Debtor
warrants and will defend the same unto the
Secured Party against the claims and
demands of all persons and parties
whomsoever. The Debtor is not in default in the
performance of any
obligation or the payment of any sum owing with respect to the
Collateral.
On or after the occurrence of an uncured event of default, the Debtor will
take
all steps necessary to cause or permit the Secured Party to cause the Stock to
be registered in the name of the Secured Party and new share certificates to
be issued.
6. Default. The occurrence of default under the Loan Documents will constitute a default by the Debtor under this Agreement.
7. Remedies. On the occurrence of an event of default that has not been cured, the Secured Party may take the following actions:
7.1 Remedy. The Secured Party may (a) exercise in respect of the Collateral or
any
portion
thereof all of the rights and remedies of a secured party under the
UCC,
or (b) at any time and from time to time sell, resell, assign and deliver,
in the
Secured Party's discretion, all or any part of the Collateral, in one or
more
parcels at the same or different
times, and all right, title and interest,
claim and
demand therein and right of redemption
thereof, at public or
private sale on
commercially reasonable terms. In connection
therewith, the
Secured Party
may bid on such Collateral for its own account and the Debtor
hereby waives
and releases any and all equity or right of redemption. To
effect any sale,
transfer or other disposal of any of the Collateral, the Secured
Party has the
right, for and in the name, place and stead of the Debtor, to
execute
endorsements,
assignments or other instruments of conveyance or
transfer
with respect to all or any of the Collateral.
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7.2 Sale Procedure. Except as expressly provided for herein, no demand or
advertisement, all of which are hereby expressly waived by the Debtor, will
be
required in connection with any sale or other disposition of any part of the
Collateral
which threatens to decline speedily in value or which is of a type
customarily sold
on a recognized market. In all other events, the Secured
Party will give the Debtor,
at least ten (10) days prior notice of the time and
place of any public sale and of
the time after which any private sale or other
disposition is to be made, which
notice the Debtor
agrees is reasonable, all
other demands and advertisements
being hereby waived. The
Secured Party
will not be obligated to make any sale
of Collateral, regardless of the fact that
notice of sale may have been given. The
Secured Party may adjourn any public or private sale or cause the same to be
adjourned from time to time by
announcement at the time and place fixed for sale,
and such sale may be
made at the time and place to which the same was so
adjourned. Upon each
public or private sale of Collateral, the Secured Party or
any holder of the
Notes, or any of their respective affiliates, may purchase all or
any of the
Collateral being sold, free from any equity or right of redemption,
which is
hereby waived and released by the Debtor, and may make payment
therefor
in cash or, at the Secured Party's or such holder's option (by
endorsement
without recourse), by tendering or releasing principal or accrued
and unpaid
interest on the Notes, in lieu of cash, in a face amount equal to the
amount of
the purchase price. The Debtor agrees to pay all reasonable costs and
expenses of every kind for sale or delivery, including brokers' and attorneys'
fees,
and after deducting such costs and expenses from the proceeds of sale,
the
Secured Party will apply any residue to the payment of the obligations
under the
Notes and the Debtor will continue to be liable for any deficiency
in accordance
with the Loan Documents. The balance, if any, remaining after
payment in full
of all of the obligations under the Notes will be paid to the
Borrowers.
7.3 Private Sales. Other than may be provided by law, the Debtor will not be
required to
file a registration statement or otherwise register the Collateral
under the Securities
Act of 1933 or any state securities or blue sky laws. The
Debtor recognizes that the
Secured Party may be unable to effect a public sale
of all or part of the Collateral by
reason of certain prohibitions contained in
the Securities Act of 1933, as amended, as
now or hereafter in effect, or in
applicable blue sky or other state securities laws, as
now or hereafter in
effect, but may be compelled to resort to one or more private
sales to a
restricted group of purchasers who will be obliged to agree, among other
things, to
acquire such Collateral for their own account, for investment and
not
with a view to the
distribution or resale thereof. The Debtor agrees that
private
sales so made may be at prices and other terms less favorable to the
Debtor than
if such Collateral were sold at
public sales, and that the Secured
Party has no
obligation to delay sale of any such
Collateral for the period of
time necessary
to permit the issuer of such Collateral, even if such issuer
would agree, to register
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such Collateral for public sale under such applicable
securities laws. The Debtor
agrees that private sales, absent other adverse
circumstances, will not be deemed
to have been made in a commercially
unreasonable manner. In connection with
the foregoing, the Secured Party
may, at the Debtor's expense, consult with
counsel to determine whether a
public or private sale of Collateral is necessary
or appropriate.
8. Miscellaneous. It is further agreed as follows:
8.1 Time. Time is of the essence of this Agreement and each provision of this
Agreement.
8.2 Notices. Any notice required or permitted to be given by this Agreement will
be
deemed to have been given on the date such notice is delivered personally
or by
telefacsimile to the party designated to receive such notice, on the date
sent by
overnight courier or on the date deposited in the United States mail,
postage
prepaid, and directed to the notice address specified in the initial
paragraph of
this Agreement or otherwise provided to the Secured Party in
writing.
8.3 Cumulative Remedies. No failure on the part of the Secured Party to
exercise,
and no delay in exercising any right under this Agreement will
operate as a waiver
thereof, nor will any single or partial exercise by the
Secured Party of any right
under this Agreement preclude any other or further
right of exercise thereof or
the exercise of any other right except as provided
in the Loan Documents.
8.4 Construction. This Agreement is to be construed according to the internal
laws of
the State of Oklahoma. All actions with respect to this Agreement
may be
instituted in the
Courts of the State of Oklahoma or the United States
District
Court sitting in Oklahoma
County, Oklahoma.
8.5 Amendment. Neither this Agreement nor any of the provisions hereof can be
changed,
waived, discharged or terminated, except by an instrument in
writing
signed by the party
against whom enforcement of the change, waiver,
discharge or termination is sought.
8.6 Severability. The provisions of this Agreement are severable, and if any
clause or
provision is held invalid, illegal or unenforceable in any respect in
any jurisdiction,
the
validity, legality and enforceability of the remaining
provisions contained herein
will not be in any way affected or impaired
thereby.
8.7 Binding Effect. This Agreement will be binding on the Debtor and the
Debtor's
successors and permitted assigns, and will inure to the benefit of the
Secured Party
and the Secured Party's successors and assigns.
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8.8 Continuing Agreement. This is a continuing Agreement and the grant of a
security
interest hereunder will remain in full force and effect and all the
rights, powers and
remedies of the Secured Party hereunder will continue to
exist until all of the Secured
Indebtedness is paid in full. In such event, the
Secured Party will execute a written
termination statement, reassign to the
Debtor, without recourse, the Collateral and all
rights conveyed hereby and
return possession of any Collateral in the Secured Party's
possession to the
Debtor.
9. Restatement. This Agreement amends, restates and replaces in its entirety that certain assignment dated October 16, 1997, executed by the Debtor, pursuant to which the Debtor assigned and transferred to the Secured Party all of the Debtor's right, title and interest in and to that certain Promissory Note dated October 17, 1997, executed by PFC in the original principal amount of Three Million Dollars ($3,000,000.00), and the terms and provisions hereby will supersede the terms and provisions thereof.
IN WITNESS WHEREOF, the Debtor and the Secured Party have executed and delivered this Agreement effective the date first above written.
SBL CORPORATION, an Oklahoma corporation
By /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, President
(the "Debtor")
STILLWATER NATIONAL BANK AND TRUST
COMPANY,
N.A.
By /s/
Xxxx
Xxxxxx
Xxxx Xxxxxx, Senior Vice President
(the "Secured Party")
SECURITY AGREEMENT
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