DATE OF AGREEMENT
7-28-99
SECURITY AGREEMENT
________________________________________________________________
DEBTOR'S NAME AND ADDRESS PLEDGOR NAME AND ADDRESS
________________________________________________________________
SBL Corporation Golsen Petroleum Corporation
Golsen Petroluem Corporation X.X. Xxx 000
X.X. Xxx 000 Xxxxxxxx Xxxx, XX 00000
Xxxxxxxx Xxxx, XX 00000
Xxxx X. Xxxxxx
00 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
_______________________________________________________________
LENDER NAME AND ADDRESS
____________________________
The Bank of Union
X.X. Xxx 0000
Xx Xxxx, XX 00000
____________________________
X. XXXXX OF SECURITY INTEREST. For value received, the
Undersigned whether one or more (hereinafter individually referred
to as "Debtor" or "Pledgor" as their capacities are above set
forth) hereby grants to Lender named above a security interest in
the property described in Paragraph II, which property is
hereinafter referred to collectively as "Collateral". This
security interest is given to secure all the obligations of the
Debtor and of the Pledgor to Lender as more fully set forth in
Paragraph III and IV hereof.
II. COLLATERAL. The Collateral includes: (A) All specifically
described Collateral; (B) All proceeds of Collateral; and (C) Other
property as indicated below.
________________________________________________________________
(A) SPECIFICALLY DESCRIBED COLLATERAL
________________________________________________________________
1,000 shares of LSB Industries, Inc. Preferred "B" stock -
Certificate Number OKP 021
1,000 shares of LSB Industries, Inc. Preferred "B" stock -
Certificate Number OKP 022
1,000 shares of LSB Industries, Inc. Preferred "B" stock -
Certificate Number OKP 023
1,000 shares of LSB Industries, Inc. Preferred "B" stock -
Certificate Number OKP 024
(B) ALL PROCEEDS of the specifically described Collateral
regardless of kind, character or form (including, but not
limited to, renewals, extensions, redeposits, reissues or any
other changes in form of the rights represented thereby),
together with any stock rights, rights to subscribe,
liquidating dividends, stock dividends, dividends paid in
stock or other property, new securities, or any other property
to which Undersigned may hereafter become entitled to receive
by reason of the specifically described Collateral; and in the
event Undersigned receives any such property, Undersigned
agrees immediately to deliver same to Lender to be held by
Lender in the same manner as Collateral specifically described
above.
(C) OTHER PROPERTY which shall be deemed Collateral shall include
all dividends and interest paid in cash on the Collateral,
provided, however, that Lender at its option may permit such
dividends and/or interest to be received and retained by
Undersigned, but provided further, that Lender may at any time
terminate such permission. Collateral shall further include
without limitation, all money, funds, or property owned by
Undersigned which is now or which hereafter may be possessed
or controlled by Lender whether by pledge, deposit or
otherwise.
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III. OBLIGATIONS SECURED BY THIS AGREEMENT. The security interest
herein granted is given to secure all of the obligations of Debtor
or Pledgor to Lender including: (a) The performance of all of the
agreements, covenants and warranties of the Debtor or Pledgor as
set forth in any agreement between Debtor or Pledgor and Lender;
(b) All liabilities of Debtor or Pledgor to Lender of every kind
and description, including: (1) all future advances, (2) both
director and indirect liabilities, (3) liabilities due or to become
due and whether absolute or contingent, and (4) liabilities now
existing or hereafter arising and however evidenced; (c) All
extensions and renewals of liabilities of Debtor or Pledgor to
Lender for any term or terms to which Undersigned hereby consents;
(d) All interest due or to become due on the liabilities of Debtor
or Pledgor to Lender; (e) All expenditures by Lender involving the
performance of or enforcement of any agreement, covenant or
warranty provided for by this or any other agreement between the
parties; and (f) All costs, attorney fees, and other expenditures
of Lender in the collection and enforcement of any obligation or
liability of Debtor or Pledgor to Lender and in the collection and
enforcement of or realization upon any of the Collateral.
IV. FUTURE ADVANCES. It is specifically agreed that the
obligations of Debtor and Pledgor secured by this Agreement include
all future advances by Lender to Debtor as set forth in Paragraph
III above.
V. ADDITIONAL PROVISIONS. The Undersigned agrees to the
Additional Provisions set forth on the reverse side hereof, the
same being incorporated herein by reference.
__________________________________________________________________
RECEIPT FOR COLLATERAL SIGNATURES
__________________________________________________________________
______________________________
NAME
/s/ Xxxx X. Xxxxxx
________________________________
NAME
Golsen Petroleum Corporation
The Bank of Union
______________________________ ______________________________
LENDER NAME CORPORATION OR PARTNERSHIP
NAME
/s/ Xxxx X. Xxxxxxx President
_______________________________ ___________________ __________
BY Xxxx X. Xxxxxxx TITLE BY TITLE
ADDITIONAL PROVISIONS
UNDERSIGNED EXPRESSLY WARRANTS, COVENANTS AND AGREES:
WARRANTIES AND COVENANTS
A. RECORDS AND INFORMATION
1. Financial Information. All loan applications, balance sheets,
earnings statements, other financial information and other
representations which have been, or may hereafter be, furnished
Lender to induce it to enter into or continue a financial
transaction with Debtor fairly represent the financial condition of
Debtor as of the date and for the period shown therein, and all
other information, reports, documents, papers and data furnished to
Lender are or shall be, at the time furnished, accurate and correct
in all material respects and complete insofar as completeness may
be necessary to give Lender a true and accurate knowledge of the
subject matter. There has been no material change in the financial
condition of Debtor since the effective date of the last furnished
financial information which has not been reported to Lender in
writing. (The provisions of this paragraph do not apply to
Pledgors who are different parties from Debtor.)
2. Furnishing of Information on Collateral. Undersigned will
furnish Lender information adequate to identify with accuracy all
Collateral in a form and substance and at all times as may be
requested by Lender. Undersigned will also upon request deliver to
Lender true copies of purchase orders, shipping and delivery
receipts and invoices evidencing and describing the Collateral.
Undersigned will execute such documents as Lender may from time to
time require to enable Lender to perfect the security interest
granted hereby and to receive proceeds of and distribution from or
interests in the Collateral.
3. Inspection and Records. Undersigned will at all times maintain
accurate books and records covering the Collateral. Lender is
hereby given the right and privilege of making such inspections of
the records as it deems necessary and of auditing or causing an
audit for verification of the books and records of the Undersigned
and relating to the Collateral at any time and from time to time.
Undersigned agrees to assist Lender in every way necessary to
facilitate such audits and verifications.
X. XXXX STATUS, INSURANCE AND ORDINARY COURSE DISPOSITION
1. Ownership Free of Encumbrances. Except for the security
interest granted hereby, Undersigned now owns or will use the
proceeds of the advances hereunder to become the owner of, the
Collateral free from any prior liens, security interests or
encumbrances, and Undersigned warrants title to and will defend the
Collateral against all claims and demands of persons claiming any
interest therein adverse to the Lender. Undersigned will not
permit any liens or security interests other than the Lender's
security interest to attach to any of the Collateral, will not
permit the Collateral to be levied upon, garnished or attached
under any legal process, or permit any other thing to be done that
may impair the value of the Collateral or the security interest
afforded hereby.
2. Sale, Lease or Disposition of Collateral Prohibited.
Undersigned shall not sell, transfer, exchange, lease, or otherwise
dispose of the Collateral or any part thereof or the Undersigned's
rights therein without first obtaining the prior written consent of
Lender. The consent of Lender may be conditioned upon any
requirements which the Lender deems to be for its protection; and,
it is understood and agreed that such consent will not be deemed to
be effective unless and until such requirements and conditions have
been fulfilled.
3. Financing Statement. No Financing Statement covering
Collateral is on file in any public office. Undersigned agrees to
join with Lender in executing one or more Financing Statements, or
other instrument of encumbrance, in form satisfactory to Lender, in
order to perfect, or to continue perfection of, the security
interest of Lender which may arise hereunder.
4. Taxes. Undersigned shall promptly pay any and all taxes,
assessments and license fees with respect to the Collateral or the
use of the Collateral.
5. Adequate Insurance. Undersigned at own expense, if required by
Lender, shall insure Collateral with companies acceptable to Lender
against such casualties and in such amounts as prudent and adequate
to protect Lender or as Lender s hall require. All insurance
policies shall be written for benefit of Undersigned and Lender as
their interests appear and such policies or certified copies
thereof evidencing same shall be furnished to Lender within ten
days of date of this agreement. All policies of insurance shall
provide for at least ten days prior written notice of cancellation
to Lender. Lender may act as attorney for Undersigned in the
procuring of insurance, in making, adjusting, and settling claims
under or cancelling such insurance and in endorsing Undersigned's
name on any drafts or checks drawn by insurers of Collateral.
EVENTS OF DEFAULT
Pledgor shall be in default under this Agreement upon the happening
of any of the following events or conditions, herein called "Events
of Default":
1. Any warranty, covenant, agreement, representation, financial
information or statement made or furnished to Lender by or in
behalf of Debtor or Pledgor to induce Lender to enter into this
Agreement, or in conjunction therewith, is violated or proves to
have been false in any material respect when made or furnished.
2. Any payment required hereunder or under any note or obligation
of Debtor or Pledgor to this Lender or to others is not made when
due or in accordance with terms of the applicable contract.
3. Debtor or Pledgor defaults in the performance of any covenant,
obligation, warranty or provision contained in any Loan Agreement
or in any other note or obligation of Debtor or Pledgor to Lender
or to others.
4. The occurrence of any event or condition which results in
acceleration of the maturity of any obligation of Debtor or Pledgor
to Lender or to others under any note, indenture, agreement or
undertaking.
5. Loss, theft, substantial damage to or destruction of
Collateral.
6. The making any levy against or seizure, garnishment or
attachment of any Collateral, the consensual encumbrance thereof,
or the sale, lease or other disposition of Collateral without the
prior written consent of Lender as required elsewhere in this
Agreement.
7. When in the judgment of Lender the Collateral becomes
unsatisfactory or insufficient in character or value, and upon
request Debtor fails to provide additional Collateral as required
by Lender.
8. Any time Lender in its sole discretion believes the prospect of
payment or performance of any liability, covenant, warranty or
obligation of Debtor or Pledgor is impaired.
9. The death, dissolution, termination of existence or insolvency
of Debtor or Pledgor, the appointment of a receiver over any part
of Debtor's property or any part of the Collateral, an assignment
for the benefit of creditors or the commencement of any proceeding
under any bankruptcy or insolvency law levied against Debtor or
Pledgor or any guarantor or surety for Debtor or Pledgor.
REMEDIES
Upon the occurrence of an Event of Default, and at any time
thereafter, Lender may at its option and without notice or demand
to Debtor or Pledgor except as otherwise provided by law, exercise
any and all rights and remedies provided by the Uniform Commercial
Code of the state in which Lender is organized and holds its
certificate of authority, as well as all other rights and remedies
possessed by Lender, including, but not limited to:
1. Declare all liabilities secured hereby immediately due and
payable, and/or proceed to enforce payment and performance of all
liabilities secured hereby.
2. Possess all books and records evidencing or pertaining to the
Collateral, and for this purpose Lender is hereby given authority
to enter into and upon any premises at which such books and records
or any part of them may be situated, and to remove them.
3. Apply that portion of the Collateral consisting of cash or cash
equivalent items such as checks, drafts, or deposited funds against
any liabilities of Debtor or Pledgor selected by Lender, and for
this purpose, Undersigned agrees that cash or equivalents will be
considered identical to cash proceeds. Lender shall have the right
immediately and without further action by it to set off against the
liabilities of Debtor secured hereby all money owned by Lender to
Debtor, whether due or not due, and Lender shall be deemed to have
exercised the right to set off and to have made a charge against
such money at the time of any acceleration upon default even though
such charges made are entered on the Lender's books subsequent
thereto.
4. Transfer any of the Collateral or evidence thereof in to its
own name or that of a nominee and receive all proceeds therefrom
and hold the same as security for the liabilities secured hereby to
Lender or apply it on or against any such liability. Lender may
also demand, collect, receipt for, settle, compromise, adjust, xxx
for, foreclose, release or realize upon Collateral in its own name
or in the name of the Pledgor as Lender may determine.
5. Sell or otherwise dispose of the Collateral. Unless Collateral
is whole or part is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market,
Lender will give Debtor and Pledgor reasonable notice of the time
and place of any public sale or of the time after which any private
sale or other disposition is to be made. Any requirement of notice
shall be met if notice is mailed, postage prepaid, to the address
provided for herein at least ten days before sale or other
disposition or action. Lender shall be entitled to, and
Undersigned shall be liable for, all reasonable costs and
expenditures incurred in realizing on its security interest,
including without limitation, court costs, fees for replevin bonds,
storage, repossession costs, repair and preparation costs for sale,
selling costs, and reasonable attorneys' fees as set forth in any
promissory note. All such costs shall be secured by the security
interest in the Collateral covered herein.
6. Lender shall not be liable for failure to collect any account,
enforce any contract right, or for any other act or omission on the
part of Lender, its officers, agents or employees, except as the
same constitutes a lack of good faith or failure to act in a
commercially reasonable manner. Lender shall have acted in a
commercially reasonable manner if its action or non-action is
consistent with the general usage of lenders in the area of
Lender's location at the same time the action or non-action occurs,
but this standard shall not constitute disapproval of any
procedures which may be otherwise reasonable not require Lender to
take necessary steps to preserve rights against prior parties in an
instrument or chattel paper.
GENERAL
1. Expenditures of Lender. At its option and after any written
notice to Undersigned required by law, such notice Undersigned
hereby agrees is sufficient if mailed, postage prepaid, to the
address of Undersigned provided for herein at least ten days before
the commencement of the performance of the duties specified
therein, it is agreed Lender may discharge taxes, liens, security
interests or other encumbrances on Collateral and may pay for the
repair of any damage to the Collateral, for the maintenance and
preservation thereof and for insurance thereon. Undersigned shall
be liable for and agrees to pay Lender for expenditures of Lender
for taxes on Collateral, for the discharge of liens, security
interests, or other encumbrances on the Collateral, for the repair
of any damage to Collateral, and for all costs, attorneys' fees or
other disbursements of Lender in connection with the foregoing.
Undersigned agrees promptly to reimburse Lender for all such
expenditures and until such reimbursement the amounts of such
expenditures shall be considered a liability of Undersigned to
Lender which is secured by this Agreement. In addition,
Undersigned shall be liable for and agrees to pay Lender for all
costs, attorneys' fees and other disbursements by Lender as allowed
by law or provided for herein in the enforcement or collection of
any note, warranty or duty of Undersigned to Lender, or in the
realization upon or the enforcement or collection of any account,
receivable, contract right, promissory note, chattel paper,
instrument, document or other Collateral in which Lender has a
security interest. Undersigned agrees promptly to reimburse Lender
for all such expenditures, and until such reimbursement the amounts
of such expenditures shall be considered a liability of Undersigned
to Lender which is secured by this Agreement.
2. Right of Offset. Any property, tangible or intangible of
Undersigned in possession of Lender at any time during the term
hereof, or any indebtedness due from Lender to Undersigned and any
deposit or credit balances due from Lender to Undersigned, or any
of the foregoing of any party hereto, is pledged to secure payment
hereof and may at any time while the whole or any part of
Undersigned's indebtedness to Lender remains unpaid, whether before
or after maturity thereof, be appropriated, held or applied toward
payment of any obligation of Undersigned to Lender.
3. Applicable Law. The law of the jurisdiction where Lender is
organized or holds its certificate of authority the Undersigned who
was entitled thereto shall control this Agreement.
4. Waivers. No act, delay or omission, including Lender's waiver
of remedy because of any default hereunder, shall constitute a
waiver of any of Lender's rights and remedies under this Agreement
or any other agreement between the parties. All rights and
remedies of Lender are cumulative and may be exercised singularly
or concurrently, and the exercise of any one or more remedy will
not be a waiver of any other. No waiver, change, modification or
discharge of any of Lender's rights or of Undersigned's duties as
so specified or allowed will be effective unless in writing and
signed by a duly authorized officer of Lender, and any such waiver
will not be a bar to the exercise of any right or remedy or any
subsequent default. Undersigned hereby waives: (a) all demands and
notices of any action taken by Lender under the Agreement or any
other agreement between the parties or in connection with any
notes; (b) an indulgence of Lender; and (c) any substitution for,
exchange of, or release of all or any part of the Collateral or of
other Collateral securing obligations of Debtor to Lender.
Undersigned also consents to the addition or release of any person
liable on any obligation of Debtor or Undersigned to Lender.
5. Agreement Binding on Assigns. This agreement shall inure to
the benefit of the successors and assigns of Lender and shall be
binding upon the heirs, executors, administrators, successors and
assigns of Undersigned.
6. Rights of Lender Assignable. Lender at any time and at its
option may pledge, transfer or assign its rights under this
Agreement in whole or in part, and any pledgee, transferee, or
assignee shall have all the rights of Lender to the rights or parts
thereof so pledged, transferred or assigned. The rights of the
Undersigned hereunder may not be assigned.
7. Joint and Several Responsibility of Pledgor. If more than one
Undersigned executes the Agreement, their responsibility hereunder
shall be joint and several and the reference to undersigned herein
shall be deemed to refer to each Undersigned signing this
Agreement.
8. Separability of Provisions. If any provision of this Agreement
shall for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
9. Copies. A carbon, photographic, or other reproduction of this
Security Agreement or of any financing statement prepaid or filed
with respect hereto is sufficient as a financing statement.
10. Notice of Name Change, etc. Undersigned will immediately
notify Lender of any change in his, her, its or their name,
identity, or organizational or corporate structure.
