DATE OF AGREEMENT
6/16/98
SECURITY AGREEMENT
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DEBTOR'S NAME AND ADDRESS PLEDGOR NAME AND ADDRESS
________________________________________________________________
Golsen Petroleum Corporation Xxxx X.Xxxxxx
X.X.Xxx 000 X. X. Xxx 000
Xxxxxxxx Xxxx, XX 00000 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.
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(A) SPECIFICALLY DESCRIBED COLLATERAL
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40,000 shares of LSB Industries, Inc. common stock,
Certificate Number XXX 00000.
(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.
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RECEIPT FOR COLLATERAL SIGNATURES
________________________________________________________________
____________________________
NAME Xxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
____________________________
NAME
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.
