1
EXHIBIT "C"
SECURITY AGREEMENT - PLEDGE
RICHMOND PARTNERS, LTD., whose address is 00000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000, hereinafter called "Debtor", for value received,
the receipt and sufficiency of which is hereby acknowledged, hereby grants to
___________ whose address is ______________________________ hereinafter called
"Secured Party", the security interest hereinafter set forth and agrees with
Secured Party as follows:
I. SECURITY INTEREST
Debtor hereby grants to Secured Party a security interest in and agrees
and acknowledges that Secured Party has and shall continue to have a security
interest in the following described property, to-wit:
2,000,000 shares of common stock, par value $0.1 per share, of Tyler
Corporation (the "Shares")
together with all monies, income, proceeds and benefits attributable or
accruing to said property, including, but not limited to, all stock rights,
rights to subscribe, liquidating dividends, stock dividends, property, cash
distributions, dividends paid in stock, new securities, cash dividends or other
properties or benefits of which Debtor is or may hereafter become entitled to
receive on account of said property, and in the event that Debtor shall
receive any such, Debtor shall hold same as Trustee for Secured Party and will
immediately deliver same to Secured Party, to be held by Secured Party in the
same manner as the property specifically described above is held hereunder. All
property of all kinds in which the Secured Party is herein granted a security
interest shall hereinafter be called the "Collateral". The undersigned agrees
to execute such stock powers, endorse such instruments, or execute such
additional pledge agreements or other documents as may be required by the
Secured Party in order to effectively grant to Secured Party the security
interest in the Collateral.
The security interest granted hereby is to secure the payment of that
certain promissory note (the "Note") of even date herewith, executed by Debtor
in favor of Secured Party in the principal amount of $1,750,000.00, together
with any and all other indebtedness and liabilities whatsoever of the Debtor to
Secured Party whether direct or indirect, absolute or contingent, due or to
become due, and whether now existing or hereafter arising and howsoever
evidenced or acquired, and whether joint or several (all of which are
hereinafter sometimes called the "Obligations").
II. WARRANTIES AND COVENANTS OF DEBTOR
Debtor warrants, covenants and agrees that:
(1) Except for the security interest granted hereby, the Debtor is
the owner of the Collateral free of any adverse claim, security interest or
encumbrance; and the Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or interest therein;
(2) Debtor authorizes the Secured Party to file, in jurisdictions
where this authorization will be given effect, a Financing Statement signed
only by the Secured Party covering the Collateral; and at the request of
Secured Party, the Debtor will join the Secured Party in executing one or more
Financing Statements pursuant to the Uniform Commercial Code, in form
satisfactory to the Secured Party, and will pay the cost of filing the same or
filing or recording the Security Agreement in all public offices wherever filing
or recording is deemed by the Secured Party to be necessary or desirable, it
being further stipulated in this regard that the Secured Party may also at any
time or times sign any counterpart of this Security Agreement signed by the
Debtor and file same as a Financing Statement if the Secured Party shall elect
to do so;
(3) Debtor will not sell or offer to sell or otherwise transfer or
encumber the Collateral or any interest therein without the written consent of
the Secured Party;
2
(4) Debtor will keep the Collateral free from any adverse lien, security
interest or encumbrances;
(5) Debtor will deliver to the holder of the Obligations additional
collateral, upon demand by such holder, if such holder deems the Collateral then
held hereon to be insufficient, to properly and amply secure all Obligations
secured hereby;
(6) Debtor will pay to Secured Party all expenses and expenditures,
including reasonable attorneys' fees and legal expenses, incurred or paid by
the Secured Party in exercising or protecting its interest, rights and remedies
under this Security Agreement.
(7) At all times during the term of the Note the outstanding principal
balance of the Note, together with accrued interest thereon shall not exceed
60% of the value of the Collateral. The term "value of the Collateral" as used
herein shall mean the average closing price for the prior sixty (60) day period
as quoted on a national securities exchange on which the Collateral is then
listed or on an automated quotation system times the number of shares
comprising the Collateral. In the event the outstanding principal amount of the
Note plus accrued interest thereon exceeds 60% of the value of the Collateral,
Debtor agrees to immediately deliver to the Secured Party collateral acceptable
to the Secured Party its sole discretion to further secure the Note with a
value, as reasonably determined by the Secured Party, that when added to the
then value of the Collateral will cause the then outstanding principal balance
of the Note, together with accrued interest thereon, not to exceed 60% of the
combined value of such additional collateral and the value of the Collateral.
(8) Debtor represents that Tyler Corporation is contractually obligated
to file a shelf registration statement with respect to the Collateral within
ninety (90) days after Debtor's written demand; provided, however, that Tyler
Corporation may defer the registration for an additional ninety (90) days if
Tyler Corporation's board of directors determines that such deferral would be
in Tyler Corporation's best interest.
(9) On or before the eighteenth (18th) month after the funding of the
Note, Debtor will make a written demand that Tyler Corporation file a shelf
registration with respect to the Collateral thus exercising the demand right
described in paragraph (8) above. Failure of Debtor to make such written demand
may, at the option of the Secured Party, constitute an event of default
hereunder and under the Note.
(10) Pursuant to that certain Purchase Agreement (herein so called)
dated effective as of July 3, 1997 by and between Tyler Corporation ("Tyler"),
Xxxxx X. Xxxxxx, individually and as general partner of the Debtor ("Waters")
and the Debtor, Debtor has agreed to purchase from Tyler the Shares. In
connection therewith, Debtor hereby represents and warrants to the Secured
Party that the Purchase Agreement is in full force and effect and has not been
assigned, modified or amended, nor has Waters or Debtor granted any security
interest therein and Debtor agrees to deliver to the Secured Party any notices,
or other communications given pursuant to the Purchase Agreement
contemporaneously with the giving or receipt of such notices pursuant to the
Purchase Agreement.
III. GENERAL COVENANTS
(1) The security interest granted hereby shall in no way be affected
by any indulgence or indulgences, extension or extensions, change or changes in
the form, evidence, maturity, rate of interest or otherwise of any of the
Obligations hereby secured, nor by want of presentment, notice, protest, suit
or indulgence upon any of such Obligations, nor shall any release of any
security for or of any of the parties liable for the payment of any of the
Obligations secured hereby in any manner affect or impair this pledge, and same
shall continue in full force and effect in accordance with the terms until all
of the Obligations have been fully paid.
(2) Any and all securities and other properties heretofore, now or
hereafter delivered to Secured Party, or in Secured Party's possession, shall
also secure all Obligations and shall be held and construed to be a part of the
Collateral hereunder to the same extent as fully described herein.
2
3
(3) Secured Party shall have the power to endorse and is hereby
appointed Debtor's agent for the purpose of endorsing in the name of Debtor any
instrument or document constituting Collateral or which may be received in
payment of or on account of the Collateral.
IV. EVENTS OF DEFAULT
The Debtor shall be in default under this Security Agreement upon the
happening of any of the following events or conditions:
(1) Default in the payment or performance of any liability or
obligation of the Debtor or of any maker, endorser or guarantor of any
liability or obligation of the Debtor to the holder of the Obligations,
including, but not by way of limitation, default in the payment of any
principal or interest on any of the Obligations when due;
(2) Failure of the Debtor to deliver additional collateral as provided;
(3) Any deterioration or impairment of the Collateral or any part
thereof or any decline or depreciation in the market price thereof (whether
actual or reasonably anticipated) which, in the judgment of the Secured Party,
causes the Collateral to become unsatisfactory as to value or character.
(4) The levy of any attachment, execution or other process against
the Debtor or any of the Collateral;
(5) Death, dissolution, termination of existence, insolvency or
business failure of the Debtor or any endorser, guarantor or surety of any of
the Obligations, or the commission of the act of bankruptcy by, or the
appointment of receiver or other legal representative for any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceedings under any bankruptcy or insolvency law by or against, the
Debtor or any endorser, guarantor or surety for any of the Obligations.
(6) Default in the performance of any other covenant or agreement of
Debtor to Secured Party, whether under this Security Agreement or otherwise;
(7) The occurrence of any event which under the terms of any evidence
of indebtedness, indenture, loan agreement, security agreement or similar
instrument permits the acceleration of maturity of any indebtedness of Debtor
to Secured Party, or to others than Secured Party; or Secured Party receives
notification that another person has or expects to acquire a security interest
in the Collateral or any part thereof.
V. REMEDIES
In the event of the default in the payment of any of the Obligations or
any principal, interest or other amount payable thereunder, when due, or upon
the happening of any of the events of default specified herein, and at any time
thereafter, at the option of the holder thereof, any or all of the Obligations
shall become immediately due and payable without presentment or demand or any
notice to the Debtor or any other person obligated thereon and the Secured
Party shall have and may exercise with reference to the Collateral and
Obligations any and all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted in the State of Texas, and as otherwise
granted herein or under any other applicable law or under any other agreement
executed by Debtor, including, without limitation, the right and power to sell,
at public or private sale or sales, or otherwise dispose of or utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under this Security Agreement or under the Uniform Commercial Code after
default by the Debtor, and to apply the proceeds thereof toward payment of any
costs and expenses and attorneys' fees and legal expenses thereby incurred by
the Secured Party and toward payment of the Obligations, in such order or
manner as Secured Party may elect. To the extent permitted by law, Debtor
expressly waives any notice of sale or other disposition of the Collateral and
any other rights or remedies of Debtor or formalities prescribed by law
relative to sale or disposition of the Collateral or exercise of any other
right or remedy of Secured
3
4
Party existing after default hereunder; and to the extent any such notice is
required and cannot be waived, Debtor agrees that if such notice is mailed,
postage prepaid, to the Debtor at the address shown hereinabove at least five
(5) days before the time of the sale or disposition, such notice shall be
deemed reasonable and shall fully satisfy any requirement for giving of said
notice.
Secured Party is hereby granted the right, after default in payment of
any of the Obligations or in the performance of any covenants secured hereby,
to transfer at any time to itself or its nominee the securities or other
property hereby pledged, or any part thereof, and to thereafter exercise all
voting rights with respect to such security so transferred and to receive the
proceeds, payments, moneys, income or benefits attributable or accruing thereto
and to hold the same as security for the Obligations hereby secured, or at
Secured Party's election, to apply such amounts to the Obligations, whether or
not then due, in such order as Secured Party may elect, or, Secured Party may,
at its option, without transferring such securities or property to its nominee,
exercise all voting rights with respect to the securities pledged hereunder and
vote all or any part of such securities at any regular or special meeting of
shareholders, and the undersigned does hereby name, constitute and appoint as a
proxy of the undersigned the President or any Vice President of Secured Party,
in the undersigned's name, place and stead to vote any and all such securities,
as said proxy may elect, for and in the name, place and stead of the
undersigned, such proxy to be irrevocable and deemed coupled with an interest.
Debtor hereby agrees to cooperate fully with Secured Party in order to
permit Secured Party to sell, at foreclosure or other private sale, the
Collateral pledged hereunder. Specifically, Debtor agrees to fully comply with
the Securities Laws of the United States and of the State of Texas and to take
such action as may be necessary to permit Secured Party to sell or otherwise
transfer the securities pledged hereunder in compliance with such laws.
VI. MISCELLANEOUS
Second Party may, at its option, following the occurrence of an Event
of Default, demand, xxx for, collect or make any compromise or settlement it
deems desirable with reference to the Collateral. The Secured Party shall not
be obligated to take any steps necessary to preserve any rights in the
Collateral against prior parties, which Debtor hereby assumes to do.
No delay or omission on the part of Secured Party in exercising any
rights hereunder shall operate as a waiver of any such right or any other
right. A waiver on any one or more occasions shall not be construed as a bar
to or waiver of any right or remedy on any future occasion.
It is the intention of the parties hereto to comply with the usury laws
of the State of Texas; accordingly, it is agreed that notwithstanding any
provision to the contrary in the Security Agreement, or in any of the documents
evidencing the Obligations or otherwise relating thereto, no such provision
shall require the payment or permit the collection of interest in excess of the
maximum permitted by law. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Security
Agreement, or in any of the documents evidencing the Obligations or otherwise
relating thereto, then in such event (a) the provisions of this paragraph shall
govern and control, (b) neither the Debtor hereof nor his heirs, legal
representatives, successors or assigns or any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount permitted by law, (c) any
such excess which may have been collected shall be, at the option of the holder
of the instrument evidencing the Obligations, either applied as a credit
against the then unpaid principal amount thereof or refunded to the Maker
thereof and (d) the effective rate of interest shall be automatically subject
to reduction to the maximum lawful contract rate allowed under the usury laws
of the State of Texas as now or hereafter construed by the courts having
jurisdiction.
In order to induce Secured Party to advance and loan such funds to
and/or for the benefit of Debtor, Debtor hereby covenants and agrees that in
the event of default by the Debtor (an event of default shall be any one of
those events of default stated above) that the Secured Party shall have the
absolute and unconditional right, without the prior
4
5
notice and/or any prior hearing of any kind whatsoever, to seize and take
possession of the Collateral, and furthermore the Debtor does hereby expressly
waive any right to any prior notice and/or any prior hearing prior to seizure
and taking possession of the Collateral and/or property by the Secured Party in
the event of default by the Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of Debtor shall bind his heirs,
executors or administrators and his or its successors or assigns. The rights
and remedies of Secured Party hereunder are cumulative and the exercise of any
one or more of the remedies provided herein shall not be construed as a waiver
of any of the other remedies of Secured Party.
Any provision found to be invalid under the laws of the State of Texas,
or any other state having jurisdiction, shall be invalid only with respect to
the offending provision. All words used herein shall be construed of such
gender or number as the circumstances require. If this Security Agreement is
executed by more than one debtor, the Obligations of all such debtors shall be
joint and several. The law of the State of Texas shall apply to this Security
Agreement and its construction and interpretation.
EXECUTED on this 10 day of September, 1997.
"DEBTOR"
RICHMOND PARTNERS, LTD.
By: /s/ XXXXX X. XXXXXX
-----------------------------------------
Xxxxx X. Xxxxxx, its general partner
5
