Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 27)
LSB INDUSTRIES, INC.
(Name of Issuer)
(Title of Class of Securities)
(CUSIP Number)
16 South Pennsylvania
Oklahoma City, Oklahoma 73107
(405) 235-4546
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of his Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent (5%) of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of less than five percent (5%) of such class. See Rule 13d-7.)
Note: Six (6) copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, Jack E. Golsen
S.S. or I.R.S. Identification ###-##-####
Nos. of Above Persons
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See Instruc- Not applicable
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organi- USA
zation
(7) Sole Voting Power 374,452
Number of Shares (8) Shared Voting
Power 3,221,014
Beneficially
Owned by Each (9) Sole Dispositive 374,452
Reporting Person Power
With:
(10) Shared
Dispositive 3,221,014
Power
(11) Aggregate Amount Beneficially 3,595,466
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 27.68%
by Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
Page 2 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, Sylvia H. Golsen
S.S. or I.R.S. Identification ###-##-####
Nos. of Above Persons
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See Instruc- Not applicable
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organi- USA
zation
(7) Sole Voting Power -
Number of Shares (8) Shared Voting Power 3,221,014
Beneficially
Owned by Each (9) Sole Dispositive -
Reporting Person Power
With:
(10) Shared Dispositive 3,221,014
Power
(11) Aggregate Amount Beneficially 3,221,014
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 25.27%
by Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
Page 3 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, SBL Corporation
S.S. or I.R.S. Identification 73-1477865
Nos. of Above Persons
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See
Instruc- SC, BK, AF
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of
Organi- Oklahoma
zation
(7) Sole Voting Power -
Number of Shares (8) Shared Voting Power 2,219,309
Beneficially
Owned by Each (9) Sole Dispositive -
Reporting Person Power
With:
(10) Shared Dispositive 2,219,309
Power
(11) Aggregate Amount Beneficially 2,219,309
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 17.41%
by Amount in Row (11)
(14) Type of Reporting Person (See CO
Instructions)
Page 4 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, Golsen Petroleum
S.S. or I.R.S. Identification
Corporation
Nos. of Above Persons 73-079-8005
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See Instruc- Not applicable
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
zation
(7)
Sole Voting Power -
Number of Shares (8) Shared Voting Power 193,933
Beneficially
Owned by Each (9) Sole Dispositive
-
Reporting Person Power
With:
(10) Shared Dispositive 193,933
Power
(11) Aggregate Amount Beneficially 193,933
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [ ]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 1.61%
by Amount in Row (11)
(14) Type of Reporting Person (See CO
Instructions)
Page 5 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, Barry H. Golsen
S.S. or
I.R.S. Identification ###-##-####
Nos. of Above Persons
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(4) Source of Funds (See
Instruc- Not applicable
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organi- USA
zation
(7) Sole Voting Power 308,616
Number of Shares (8) Shared Voting Power
2,441,769
Beneficially
Owned by Each (9) Sole Dispositive 308,616
Reporting Person Power
With:
(10) Shared Dispositive 2,441,769
Power
(11) Aggregate Amount Beneficially 2,750,385
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 21.47%
by Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
Page 6 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons, Steven J. Golsen
S.S. or I.R.S. Identification ###-##-####
Nos. of Above Persons
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See Instruc- Not Applicable
tions
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organi- USA
zation
(7) Sole Voting Power 246,987
Number of Shares (8) Shared Voting Power 2,298,217
Beneficially
Owned by Each (9) Sole Dispositive 246,987
Reporting Person
Power
With:
(10) Shared Dispositive 2,298,217
Power
(11) Aggregate Amount Beneficially 2,545,204
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 19.91%
by Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
Page 7 of 22 Pages
CUSIP NO. 5021600-10-4
(1) Names of Reporting Persons,
Linda Golsen Rappaport
S.S. or I.R.S. Identification
###-##-####
Nos. of Above Persons
(2) Check the Appropriate Box if (a) [ ]
a Member of a Group (See (b) [X]
Instructions)
(3) SEC Use Only
(4) Source of Funds (See Instruc- Not applicable
tions)
(5) Check if Disclosure of Legal
Proceedings is Required Pur-
suant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organi- USA
zation
(7) Sole Voting Power 82,552
Number of Shares
(8) Shared Voting Power 2,441,769
Beneficially
Owned by Each (9) Sole Dispositive 82,552
Reporting Person Power
With:
(10) Shared Dispositive 2,441,769
Power
(11) Aggregate Amount Beneficially 2,524,321
Owned by Each Reporting Person
(12) Check if the Aggregate Amount [X]
in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented 19.80%
by Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
Page 8 of 22 Pages
CUSIP NO. 5021600-10-4
This statement constitutes Amendment No. 27 to the Schedule 13D dated October 7, 1985, as amended (the "Schedule 13D"), relating to the common stock, par value $.10 a share ("Common Stock") of LSB Industries, Inc. (the "Company"). All terms not otherwise defined herein shall have the meanings ascribed in the Schedule 13D.
This Schedule 13D is reporting matters with respect to the group consisting of Jack E. Golsen, Sylvia H. Golsen, SBL Corporation ("SBL"), Golsen Petroleum Corporation ("GPC"), a wholly owned subsidiary of SBL, Barry H. Golsen, Steven J. Golsen and Linda Golsen Rappaport.
This Amendment No. 27 is being filed as a result of a change in the facts contained in the Schedule 13D. The change is due to the acquisition by SBL of 1,000,000 shares of the Company's Series D 6% Cumulative, Convertible Class C Preferred Stock ("Series D Preferred") on November 8, 2001, which resulted in an increase in SBL's beneficial ownership of Common Stock by more than 1% of the outstanding Common Stock. In addition to the foregoing, reference is made to Item 5(c) of this Amendment No. 27 for discussion of certain other transactions in the Company's Common Stock that were effected by certain reporting persons during the past 60 days from the filing date of this Amendment No. 27.
Item 1. Security and Issuer.
Item 1 of this Schedule 13D is unchanged.
Item 2. Identity and Background.
Item 2 of this Schedule 13D is unchanged, except parts
5(b)
and (c) relating to Steven J. Golsen are amended
to read
as follows:
(b) Business Address: 7300 S.W. 44th Street
Oklahoma City, OK 73179
(c) The principal occupation or employment of
Steven J.
Golsen is Chief Executive Officer
and Co-Chairman
of a subsidiary of the Company
having the address
set forth above.
Item 3. Source and Amount of Funds or Other Consideration.
On October 17, 1997, Prime Financial Corporation
("Prime"), a subsidiary of the Company, borrowed from
SBL the principal amount of $3,000,000 (the "Prime
Loan") on an unsecured basis and payable on demand.
The purpose of the loan was to assist the Company
Page 9 of 22 Pages
CUSIP NO. 5021600-10-4
by
providing additional liquidity. As of October 15,
2001, the unpaid principal balance on the Prime Loan
was $1,350,000.
In order to make the Prime Loan to Prime, SBL and
certain
of its affiliates borrowed the $3,000,000 from
a bank
(collectively, "SBL Borrowings"), and as part of
the
collateral pledged by SBL to the bank in connection
with
such loan, SBL pledged, among other things, its
note
from Prime. Effective April 21, 2000, Prime
guaranteed
on a limited basis the obligations of SBL
and its
affiliates relating to the unpaid principal
amount due
to the bank in connection with the SBL
Borrowings, and,
in order to secure its obligations
under the guarantees,
it pledged to the bank 1,973,461
shares of the Company's
Common Stock that it holds as
treasury stock.
On October 18, 2001, the Company and Prime entered into
an agreement (the "Agreement") to take in payment of
$1,000,000 of the unpaid balance of the debt under the
Prime Loan, 1,000,000 shares of Series D Preferred,
with
each share of Series D Preferred having, among
other
things,.875 votes and voting as a class with the
Common
Stock, a liquidation preference of $1.00 per
share,
cumulative dividends at the rate of 6%, and
convertibility into Common Stock on the basis of four
shares of Series D Preferred into one share of Common
Stock. The rate of conversion is subject to increase
or decrease pursuant to the antidilution provisions
set
forth in the Certificate of Designations of the
Series
D Preferred. In connection with the Agreement,
the
Company's limited guaranty to the bank has been
reduced
to $350,000, and the number of shares of
Company Common
Stock pledged by Prime to the lender
to secure its
guaranty has been reduced to 973,450
shares.
Item 4. Purpose of Transaction.
The purpose of the transaction giving rise to the
filing of this Amendment No. 27 is described under
Item
3 above. The reporting persons do not presently
have
any plans or proposals required to be reported
under
Item 4 of this Schedule 13D.
Page 10 of 22 Pages
CUSIP NO. 5021600-10-4
Item 5. Interest in Securities of the Issuer.
(a) The following table sets forth as of the filing
date
of this Amendment 27, the aggregate number and
percentage of
the class of Common Stock of the Company
identified pursuant
to Item 1 beneficially owned by each
person named in Item 2:
Person Amount Percent(10)
Jack E. Golsen 3,595,466(1)(2)(6)(9) 27.68%
Sylvia H. Golsen 3,221,014(1)(6)(7) 25.27%
SBL 2,219,309(1)(9) 17.41%
GPC 193,933(8)(9) 1.61%
Barry H. Golsen 2,750,385(1)(3)(6) 21.47%
Steven J. Golsen 2,545,204(1)(4)(6) 19.91%
Linda Golsen Rappaport 2,524,321(1)(5)(6) 19.80%
____________________
(1) The amount shown includes (i) 1,336,199 shares held
directly by SBL; (ii) 250,000 shares that SBL has
the
right to acquire upon the conversion of
1,000,000
shares of the Company's Series D Preferred
owned of
record by SBL; (iii) 400,000 shares that
SBL has the
right to acquire upon the conversion
of 12,000 shares
of the Company's Series B Preferred
owned of record by
SBL; (iv) 39,177 shares that SBL
has the right to
acquire upon the conversion of
9,050 shares of Class C,
Series 2 Preferred Stock
owned of record by SBL; and
(v) 193,933 shares
beneficially owned by SBL's wholly
owned subsidiary,
GPC, which includes 133,333 shares
that GPC has the
right to acquire upon conversion of
4,000 shares
of Series B Preferred owned of record by
GPC. The
relationship between Jack E. Golsen, Sylvia
H.
Golsen, Barry H. Golsen, Steven J. Golsen, Linda
Golsen Rappaport, SBL, and GPC is described in
more
detail in paragraph (b) of this Item 5.
(2) The amount shown includes (i) 40,000 shares held
directly by Jack E. Golsen; (ii) 69,029 shares held
indirectly by the Jack E. Golsen 1992 Revocable
Trust;
(iii) 4,000 shares that Jack E. Golsen has
the right to
acquire upon conversion of a promissory
Page 11 of 22 Pages
CUSIP NO. 5021600-10-4
note;
(iv) 133,333 shares that J. Golsen has the
right to
acquire upon the conversion of 4,000 shares
of the
Series B Preferred Stock owned of record by
the Jack E.
Golsen 1992 Revocable Trust; (v) 35,400
shares that
Jack E. Golsen may acquire upon the
exercise of Company
incentive stock options; (vi)
70,600 shares that Jack
E. Golsen may acquire upon
the exercise of Company
nonqualified stock options;
(vii) 1,001,705 shares
owned of record by Sylvia H.
Golsen, wife of Jack
E. Golsen; (viii) 10,000 shares
owned of record by the
MG Trust, of which Jack E.
Golsen is the sole trustee
with voting and
dispositive power over the securities
held by such
trust; and (ix) 12,090 shares indirectly
held by an
estate of which Jack E. Golsen is executor
and a
beneficiary.
(3) The amount shown does not include (i) 533 shares
that
Barry Golsen's wife owns, in which Barry
Golsen
disclaims beneficial ownership, and (ii)
79,840 shares
owned of record by the Barry H.
Golsen 1992 Trust, of
which Barry H. Golsen is the
primary beneficiary, but
of which Barry H. Golsen
has no voting or dispositive
control. Such amount
does include (a) 246,616 shares
held directly by
Barry H. Golsen; (b) 41,954 shares
owned of record
by the Amy G. Rappaport Trust No. J-1,
of which
Barry H. Golsen is a
Co-Trustee; (c) 36,954
shares
owned of record by the Joshua B. Golsen Trust
No.
J-1, of which Barry H. Golsen is a
Co-Trustee;
(d) 35,888 shares owned of record by each of the
Adam
Z. Golsen Trust No. J-1, Stacy L. Rappaport
Trust No.
J-1, Lori R. Rappaport Trust No. J-1 and
Michelle L.
Golsen Trust No. J-1, of which Barry H.
Golsen is a
Co-Trustee; (e) 40,000 shares which
Barry H. Golsen may
acquire upon exercise of
Company incentive stock
options; and (f) 22,000
shares which Barry H. Golsen
may acquire upon
exercise of a nonqualified stock
option.
(4) The amount shown does not include 74,840 shares
owned
of record by the Steven J. Golsen 1992 Trust,
of which
Steven J. Golsen is the primary
beneficiary, but of
which Steven J. Golsen has no
voting or dispositive
control. Such amount does
include (i) 206,987 shares
held directly by Steven J.
Golsen; (ii) 41,954 shares
owned of record by the
Amy G. Rappaport Trust No. J-1,
of which Steven J.
Golsen is a
Co-Trustee; (iii) 36,954
shares owned of
record by the Joshua B. Golsen Trust
No. J-1, of
which Steven J. Golsen is a
Co-Trustee;
(iv) 26,000
shares which Steven J. Golsen may acquire
upon
exercise of Company incentive stock
options; and
Page 12 of 22 Pages
CUSIP NO. 5021600-10-4
(v) 14,000 shares which Steven J. Golsen may
acquire
upon exercise of nonqualified stock
options.
(5) The amount shown does not include 124,350 shares
that
Mrs. Rappaport's husband owns and 185,000
shares which
Mrs. Rappaport's husband may acquire
upon exercise of
nonqualified stock options of the
Company, for which
Mrs. Rappaport disclaims
beneficial ownership. The
amount shown does not
include 79,840 shares owned of
record by the
Linda F. Rappaport 1992 Trust, of which
Linda F.
Rappaport is the primary beneficiary, but of
which
Linda F. Rappaport has no voting or dispositive
control. Such amount does include (i) 82,552 shares
held directly by Linda F.
Rappaport; (ii) 41,954
shares
owned of record by the Amy G. Rappaport Trust
No. J-1,
of which Linda F. Rappaport is a Co-Trustee;
(iii)
36,954 shares owned of record by the Joshua B.
Golsen
Trust No. J-1, of which Linda F. Rappaport
is a Co-Trustee; and (iv) 35,888 shares owned of
record by each
of the Adam Z. Golsen Trust No. J-1,
of Stacy L.
Rappaport Trust No. J-1, Lori R.
Rappaport Trust No.
J-1 and Michelle L. Golsen
Trust No. J-1 of which Linda
F. Rappaport is a
Co-Trustee.
(6) Jack E. Golsen and Sylvia H. Golsen each disclaims
beneficial ownership of (i) the shares of Common
Stock
owned of record by Barry H. Golsen, the
shares that
Barry H. Golsen has the right to
acquire under the
Company's incentive stock options,
and the shares
considered beneficially owned by
Barry H. Golsen as a
result of his position as
trustee of certain
trusts;
(ii) the shares owned
of record by Steven J. Golsen,
the shares that
Steven J. Golsen has the right to
acquire under
the Company's incentive stock options,
and the
shares considered beneficially owned by Steven
J.
Golsen as a result of his position as trustee of
certain trusts; and (iii) the shares owned of
record by
Linda Golsen Rappaport, and the shares
considered
beneficially owned by Linda Golsen
Rappaport as a
result of her position as a trustee
of certain trusts.
Barry H. Golsen, Steven J.
Golsen and Linda Golsen
Rappaport disclaim
beneficial ownership of the shares
beneficially
owned by Jack E. Golsen and Sylvia H.
Golsen,
except for shares beneficially owned by SBL
and
GPC.
(7) The amount shown does not include, and Sylvia H.
Golsen
disclaims beneficial ownership of the
shares of Common
Stock listed in footnote (2)
above as beneficially
owned by Jack E. Golsen,
Page 13 of 22 Pages
CUSIP NO. 5021600-10-4
except such amount does not
include the 1,001,705
shares held directly by Sylvia H.
Golsen.
(8) The amount shown includes 60,600 shares held directly
by GPC and 133,333 shares that GPC has the right to
acquire upon conversion of 4,000 shares of the
Company's Series B Preferred Stock owned of record
by
GPC. The relationship between Jack E. Golsen,
Sylvia
H. Golsen, Barry H. Golsen, Steven J. Golsen,
Linda
Golsen Rappaport, SBL, and GPC is described
in more
detail in paragraph (b) of this Item 5.
(9) Holders of the Series B Preferred are entitled to
one
vote per share, and holders of the Series D
Preferred
are entitled to .875 votes per share. Both
vote
together with holders of Common Stock. The
amounts and
percentages set forth in the table
reflect only the
voting power of Common Stock into
which the Series B
Preferred and the Series D
Preferred are convertible.
is based on 11,924,203 shares of Common Stock
outstanding, as reported in the Company's Form
10-Q for the quarter ended September 30, 2001.
Shares of Common Stock of the Company not
outstanding, but which may be acquired by a
reporting person during the next 60 days under
options, warrants, rights or conversion privileges,
are considered to be outstanding only for the
purpose of computing the percentage of the class
for such reporting person, but are not deemed to be
outstanding for the purpose of computing the
percentage of the class by any other person.
(b) The following table sets forth, as the filing date
of
this Amendment 27 for each person and entity identified
under
paragraph (a), the number of shares of Common Stock
as to
which the person and entity has (1) the sole power
to vote or
direct the voting, (2) shared power to vote
or direct the
voting, (3) the sole power to dispose or to
direct the
disposition, or (4) shared power to dispose or
to direct the
disposition:
Page 14 of 23
CUSIP NO. 5021600-10-4
Sole Voting Shared Voting
and Power of and Power of
Person or Entity Disposition Disposition
Jack E. Golsen 374,452(1)(5)(12) 3,221,014(2)(3)(13)
Sylvia H. Golsen None 3,221,014(2)(11)
SBL None 2,219,309(2)(12)
GPC None 193,933(4)(12)
Barry H. Golsen 308,616(6) 2,441,769(2)(7)
Steven J. Golsen 246,987(8) 2,298,217(2)(9)
Linda Golsen Rappaport 82,552 2,441,769(2)(10)
____________________
(1) The amount shown includes (a)
109,029 shares of
Common Stock held directly by
Jack E. Golsen;
(b) 4,000 shares of Common Stock that Jack E.
Golsen has the right to acquire upon
conversion
of a promissory note; (c) 133,333 shares of
Common Stock that J. Golsen has the right to
acquire
upon the conversion of 4,000 shares of
the Series B
Preferred Stock owned of record by
him; (d) 35,400
shares that J. Golsen has the
right to acquire under
the Company's incentive
stock options; (e) 70,600
shares that Jack E.
Golsen may acquire upon the
exercise of
nonqualified stock options; (f) 10,000
shares
held of record by the MG Trust, of
which Jack E.
Golsen is the sole trustee who possesses
voting
and
dispositive power over the securities held
by such trust; and (g) 12,090 shares held by an
estate of which
Jack E. Golsen is executor and
a beneficiary.
(2) See footnote (1) under paragraph (a) of this Item 5.
(3) The amount shown includes 1,001,705 shares of Common
Stock owned of record by Sylvia H. Golsen, the wife
of
Jack E. Golsen.
(4) See footnote (8) under paragraph (a) of this Item 5.
(5) See footnote (6) under paragraph (a) of this Item 5.
Page 15 of 22 Pages
CUSIP NO. 5021600-10-4
(6) The amount shown includes
(a) 246,616 shares of
Common Stock held directly
by Barry H. Golsen;
(b) 40,000 shares of Common
Stock which Barry H.
Golsen may acquire upon exercise of
incentive
stock options of the
Company; and (c) 22,000
shares which Barry H. Golsen may acquire upon
exercise of incentive stock options of the
Company.
(7) The amount shown does not include 79,840 shares of
Common Stock owned of record by the Barry H. Golsen
1992 Trust, of which Barry H. Golsen has no voting
or
dispositive power and 533 shares of Common Stock
that
Barry Golsen's wife owns in which Barry Golsen
disclaims beneficial ownership. Such amount does
include
(a) 41,954 shares of Common Stock owned of
record by
the Amy G. Rappaport Trust No. J-1, of
which Barry H.
Golsen is a Co-Trustee; (b) 36,954
shares of Common
Stock owned of record by the
Joshua B. Golsen Trust No.
J-1, of which Barry H.
Golsen is a Co-Trustee; and (c)
35,888 shares of
Common Stock owned of record by each
of the Adam Z.
Golsen Trust No. J-1, Stacy L. Rappaport
Trust No.
J-1, Lori R. Rappaport Trust No. J-1 and
Michelle L.
Golsen Trust No. J-1, of which Barry H.
Golsen is a
Co-Trustee.
(8) The amount shown includes
(a) 206,987 shares of
Common Stock held directly
by Steven J. Golsen;
(b) 26,000 shares which Steven J. Golsen may
acquire upon exercise of incentive
stock options
of the Company; and (c) 14,000 shares
which
Steven J. Golsen may acquire upon exercise of
nonqualified stock options of the
Company.
(9) The amount shown does not include 74,840 shares of
Common Stock owned of record by the Steven J. Golsen
1992 Trust, of which Steven J. Golsen has no voting
or
dispositive power. Such amount includes (a)
41,954
shares of Common Stock owned of record by the
Amy G.
Rappaport Trust No. J-1, of which Steven J.
Golsen is
a Co-Trustee; and (b) 36,954 shares of
Common Stock
owned of record by the Joshua B. Golsen
Trust No. J-1,
of which Steven J. Golsen is a
Co-Trustee.
(10) The amount shown does not include 124,350 shares
that
Mrs. Rappaport's husband owns and 185,000
shares which
Mrs. Rappaport's husband may acquire
upon exercise of
nonqualified stock options of the
Company, for which
Mrs. Rappaport disclaims
beneficial ownership. The
amount shown does not
include 79,840 shares owned of
record by the
Linda F. Rappaport 1992 Trust, of which
Linda F.
Rappaport is the primary beneficiary, but of
which
Linda F. Rappaport has no voting or dispositive
Page 16 of 22 Pages
CUSIP NO. 5021600-10-4
control. Such amount does include
(i) 41,954
shares
owned of record by the Amy G. Rappaport
Trust No. J-1,
of which Linda F. Rappaport is a
Co-Trustee; (ii)
36,954 shares owned of record
by the Joshua B. Golsen
Trust No. J-1, of which
Linda F. Rappaport is a Co-Trustee; and
(iii) 35,888 shares owned of record by each
of
the Adam Z. Golsen Trust No. J-1, of Stacy L.
Rappaport Trust No. J-1, Lori R. Rappaport
Trust No.
J-1 and Michelle L. Golsen Trust
No. J-1 of which Linda
F. Rappaport is a
Co-Trustee.
(11) See footnotes (6) and (7) under paragraph (a) of this
Item 5.
(13) See footnote (6) under paragraph (a) of this Item 5.
SBL is wholly owned by Sylvia H. Golsen (40% owner),
Barry H. Golsen (20% owner), Steven J. Golsen (20% owner)
and
Linda Golsen Rappaport (20% owner). GPC is a wholly
owned
subsidiary of SBL. The directors and executive
officers of
SBL and GPC are Jack E. Golsen, Sylvia H.
Golsen, Barry H.
Golsen, Steven J. Golsen and Linda Golsen
Rappaport. Barry H.
Golsen, Steven J. Golsen and Linda
Golsen Rappaport are the
children of Jack E. and Sylvia H.
Golsen, husband and wife.
(c) During the past 60 days from the filing date of
this report, the following transactions were effected in
the
Common Stock by a reporting person named in response
to
paragraph (a) of this Item 5. Sylvia H. Golsen made
bona fide
charitable gifts of the Company's Common Stock
in the
following amounts: (i) a gift of 10,000 shares on
October 19,
2001 at a price of $2.85 per share; (ii) a
gift of 20,000
shares on October 25, 2001 at a price of
$2.98 per share; and
(iii) a gift of 6,000 shares on
November 1, 2001 at a price of
$2.99 per share.
(e) Not applicable.
Item 6. Contracts, Agreements, Underwritings or Relationships
With Respect to Securities of the Issuer.
Item 6 of the Schedule 13D is unchanged, except as
follows.
Effective October 18, 2001, Prime pledged
973,450 shares of
Common Stock, along with proceeds of
such shares, to
Stillwater National Bank, Stillwater,
Oklahoma (the
"Stillwater Bank") to secure repayment of
the loan made by
Stillwater Bank on October 16, 2001
Page 17 of 22 Pages
CUSIP NO. 5021600-10-4
to SBL Corporation. In
addition to standard default and
similar provisions contained
in the Security Agreement,
Stillwater Bank retains the right
to all dividends paid
in connection with the collateral. See Item
3 for a
discussion of the purpose of such pledge.
Effective December 5,
2000, Sylvia H. Golsen pledged
370,000 shares of Common Stock, along with proceeds
of such shares, to Bank of
the West, Clinton, Oklahoma
(the "Bank of the West") to secure repayment of the
loan made by Bank of the West on December
5, 2000. In
addition to standard default and
similar provisions
contained in the Security Agreement, Bank
of the West
retains the right to all dividends paid in
connection
with the collateral.
Item 7. Materials to be Filed as Exhibits.
24.1 Powers of Attorney executed by Barry H. Golsen, StevenJ. Golsen, and Linda Golsen Rappaport are filed as
Exhibit 6 to Amendment No. 3 to the Schedule 13D and
are incorporated herein by reference.
99.1 Agreement of the reporting persons as to joint filing
of this
Schedule 13D, is filed as Exhibit 7 to
Amendment No. 3 to the
Schedule No. 13D and is
incorporated herein by reference.
filed as Exhibit (a) to the original Schedule 13D and is
incorporated herein by reference.
99.3 Issuer's Proxy Statement dated July 14, 1986 setting
forth the terms of the Company's Series B 12% Cumulative
Convertible Preferred Stock is filed as Exhibit 1 to
Amendment No. 1 to the Schedule 13D and is incorporated
herein by reference.
99.4 Stacy L. Rappaport Trust No. J-1, is filed as Exhibit
14 to Amendment No. 13 to the Schedule 13D and is
incorporated herein by reference. The Joshua B. Golsen
Trust No. J-1, Adam
Z. Golsen Trust No. J-1, Amy G.
Rappaport Trust No. J-1, Lori
R. Rappaport Trust No.
J-1 and Michelle L. Golsen Trust No.
J-1 are
substantially similar to the Stacy L. Rappaport Trust
No. J-1, except for the names of the trustees, and
copies of
the same will be supplied to the Commission
upon request.
99.5 Barry H. Golsen 1992 Trust is filed as Exhibit 15 to
Amendment No. 16 to the Schedule 13D and is incorporated
herein by reference. The Steven J. Golsen 1992 Trust
and Linda F. Rappaport 1992 Trust are substantially
similar to the Barry H.
Golsen 1992 Trust, and copies
of the same will be supplied to
the Commission upon
request.
Page 18 of 22 Pages
CUSIP NO. 5021600-10-4
99.6 Agreement of Sylvia H. Golsen as to joint filing of thisSchedule 13D is filed as Exhibit 15 to Amendment No. 18
and is incorporated herein by reference.
99.7 Agreement of SBL Corporation as to the joint filing of
this Schedule 13D is filed as Exhibit 19 to Amendment
No. 23, and
is incorporated herein by reference.
99.8 Shareholder's Agreement, effective December 1, 1995,
between Sylvia Golsen and SBL Corporation is filed as
Exhibit 22 to Amendment No. 24 and is incorporated
herein by reference.
99.9 Shareholder's Agreement, effective December 1, 1995,
among Jack E. Golsen, Sylvia Golsen and SBL Corporation
is filed as Exhibit 23 to Amendment No. 24 and is
incorporated herein by reference.
99.10 Shareholder's Agreement, effective December 1, 1995,
among Barry H. Golsen, Sylvia Golsen and SBL Corporation.
The Shareholder's Agreement is substantially similar
to the Shareholder's Agreement filed as Exhibit 23 to
Amendment No.
24, and a copy of the same will be
supplied to the Commission
upon request.
99.11 Shareholder's Agreement, effective December 1, 1995,
among Steven J. Golsen, Sylvia Golsen and SBL Corporation.
The Shareholder's Agreement is substantially similar to
the Shareholder's Agreement filed as Exhibit 23 to
Amendment No.
24, and a copy of the same will be supplied
to the Commission
upon request.
99.12 Shareholder's Agreement, effective December 1, 1995, among
Linda F. Rappaport, Sylvia Golsen and SBL Corporation. The
Shareholder's Agreement is substantially similar to the
Shareholder's Agreement filed as Exhibit 23 to Amendment
No.
24, and a copy of the same will be supplied to the
Commission
upon request.
99.13 Security Agreement, dated October 16, 1997, between
Stillwater National Bank ("SNB") and Sylvia H. Golsen is
attached as Exhibit 22 to Amendment No. 25 and is
incorporated herein by reference. The Security Agreements,
all of which are dated October 16, 1997, between SNB and
each of SBL Corporation; Sylvia H. Golsen, Trustee of the
Sylvia H. Golsen 1992 Trust; Heidi Brown Shear, Trustee of
the Linda F. Rappaport 1992 Trust; Heidi Brown Shear,
Trustee of the Steven J. Golsen 1992
Trust; Heidi Brown
Shear, Trustee of the Barry H. Golsen 1992
Trust, Barry H.
Golsen and Linda F. Rappaport, Trustees of the Michelle L.
Golsen J-1 Trust; Barry H. Golsen and Steven J. Golsen,
Trustees of the Amy G. Rappaport J-1 Trust; Barry H.
Golsen and Steven J. Golsen, Trustees of the Joshua B.
Golsen J-1 Trust; Barry H. Golsen and Linda F.
Rappaport,
Trustees of
the Stacy L. Rappaport J-1 Trust; Barry H.
Golsen and Linda F. Rappaport, Trustees of the Lori R.
Rappaport J-1 Trust; and
Barry H. Golsen and Linda F.
Rappaport, Trustees of the Adam
Z. Golsen J-1 Trust are
substantially similar to the foregoing
Security Agreement,
and copies of the same will be supplied
to the Commission
upon request.
Page 19 of 22 Pages
CUSIP NO. 5021600-10-4
99.14 Security Agreement, dated June 16, 1998, between The Bank of
Union and Jack E. Golsen is attached as Exhibit 24 to
Amendment No. 25 and is incorporated herein by reference.
The
(a) Security Agreement, dated June 16, 1998, between
Bank of
Union and Sylvia H. Golsen, (b) Security Agreement,
dated
February 5, 1999, between Bank of Union and Sylvia H.
Golsen,
Trustee of the Sylvia H. Golsen 1992 Trust dated
01-08-93, and
(c) Security Agreement, dated December 9,
1997, between Bank
of Union and each of Golsen Petroleum
Corporation and Jack E. Golsen are substantially similar
to the Security Agreement filed as Exhibit 24 to Amendment
No. 25, except as to the number of shares subject to each
such Security Agreement, and a copy of the same will be
supplied to the Commission upon request.
99.15 Guaranty Agreement, dated October 16, 1997, between
SNB and
Jack E. Golsen is attached as Exhibit 25 to
Amendment No. 25
and is incorporated herein by
reference. The Guaranty
Agreements between SNB and
each of SBL Corporation, Sylvia H.
Golsen, Barry H.
Golsen (and his wife), Steven J. Golsen, and
Linda F.
Rappaport (and her husband, Claude Rappaport) are
substantially similar to the Guaranty Agreement filed
as
Exhibit 25 to Amendment No. 25, and a copy of the
same will be
supplied to the Commission upon request.
99.16 Security Agreement, dated July 28, 1999, between The
Bank of
Union and Golsen Petroleum Corporation. The
Security Agreement, dated July 28, 1999, between
Bank of Union and SBL
Corporation is substantially
similar to the Security Agreement
filed as Exhibit
19 to this Amendment No. 26, except as to the
number
of shares subject to such Security Agreement, and a
copy of the same will be supplied to the Commission
upon
request.
99.17 Agreement, dated October 18, 2001, between the Company,
Prime
Financial Corporation, and SBL Corporation.
99.18 Certificate of Designations of LSB Industries, Inc.,
filed with the Delaware Secretary of State on
November 15, 2001, designating the terms of the
Company's Series D 6% Cumulative,
Convertible Class
C Preferred Stock.
Page 20 of 22 Pages
CUSIP NO. 5021600-10-4
99.19 Promissory Note, dated October 18, 2001, by Prime
Financial Corporation in favor of SBL Corporation.
99.20 Amended Limited Guaranty, dated October 18, 2001,
superseding
the Limited Guaranty dated March 5, 1998.
99.21 Specimen Series D Preferred stock certificate.
99.22 Amended and Restated Guaranty Agreement, dated effective
November 8, 2001, by Prime Financial Corporation in favor
of
Stillwater National Bank and Trust Company, N.A.
99.23 Security Agreement, dated effective November 8, 2001,
between
SBL Corporation and Stillwater National Bank and
Trust
Company, N.A.
99.24 Security Agreement, dated December 5, 2000, between
Sylvia H.
Golsen and Bank of the West.
99.25 Commercial Pledge Agreement, dated February 2, 2001,
among SBL
Corporation, Jack E. Golsen, Sylvia H.
Golsen, and BancFirst.
A substantially similar
Commercial Pledge Agreement, dated
February 2,
2001, was entered among Jack E. Golsen, Sylvia H.
Golsen, and BancFirst, and will be supplied to the
Commission
upon request.
99.26 Commercial Security Agreement, dated August 27, 2001,
between
Jack E. Golsen and The Bank of Union.
Page 21 of 22 Pages
CUSIP NO. 5021600-10-4
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
DATED: November 27, 2001.
/s/
Jack E. Golsen
Jack E. Golsen
GOLSEN PETROLEUM CORPORATION
By: /s/ Jack E. Golsen
Jack E. Golsen, President
/s/
Jack E. Golsen *
Barry H. Golsen
/s/ Jack E. Golsen *
Steven J. Golsen
/s/
Jack E. Golsen *
Linda Golsen Rappaport
*Executed by Jack E. Golsen
pursuant to Power of
Attorney
/s/
Jack E. Golsen
Jack E. Golsen
/s/ Sylvia H. Golsen
Sylvia H. Golsen
SBL CORPORATION
By: /s/
Jack E. Golsen
Jack E. Golsen, President
Page 22 of 22 Pages
THIS AGREEMENT is entered into this 18th day of October, 2001, by and between LSB INDUSTRIES, INC., a Delaware corporation (the "Company"); PRIME FINANCIAL CORPORATION, an Oklahoma corporation ("Prime") and a wholly owned subsidiary of the Company; and SBL CORPORATION, an Oklahoma corporation ("SBL").
WHEREAS, all of the issued and outstanding stock of SBL is owned, directly or indirectly, by the following members of the immediate family of Jack E. Golsen ("J. Golsen"), Chairman of the Board of Directors and President of the Company: Sylvia H. Golsen (wife of J. Golsen); Barry H. Golsen (son of J. Golsen and Vice Chairman of the Board of Directors of the Company and President of the Company's Climate Control Business; Steven J. Golsen (son of J. Golsen and an executive officer within the Company's Climate Control Business); and Linda Golsen Rappaport (a daughter of J. Golsen) (collectively, the "Golsen Family");
WHEREAS, Prime is a wholly owned subsidiary of the Company;
WHEREAS, on or about October 16, 1997, SBL and affiliates borrowed from the Stillwater National Bank and Trust Company ("Stillwater Bank") the sum of $3,000,000 ("SBL Loan");
WHEREAS, on or about October 17, 1997, SBL loaned to Prime the $3,000,000 that SBL borrowed from Stillwater Bank, on an unsecured basis and payable on demand, with the annual interest rate payable monthly in arrears at a variable interest rate equal to the Wall Street Journal Prime Rate plus 2% per annum (the "Prime Loan");
WHEREAS, the Prime Loan was evidenced by a Promissory Note, dated October 17, 1997, which Promissory Note was amended and restated by that certain Promissory Note, dated March 5, 1998, bearing a fixed interest rate per annum of 10.75%, with Prime as the maker and payable to the order of SBL (the "Prime Note");
WHEREAS, SBL pledged to the Stillwater Bank certain of its assets, including, but not limited to, the Prime Note, to secure its payment obligations under the SBL Loan;
WHEREAS, in April, 2000, SBL and Prime agreed to modify the Prime Note from a demand note to a note with a payment date of April 1, 2001, except under limited circumstances ("Extension Agreement");
WHEREAS, in order to obtain the Extension Agreement from SBL, Prime was required to guarantee SBL's Loan to Stillwater Bank on a limited basis pursuant to the terms of a Guaranty Agreement, dated as of April 21, 2000 ("Guaranty Agreement"), as amended and modified by that certain Agreement, dated April 21, 2000, by and between Stillwater Bank, Prime and SBL ("Stillwater Agreement"), and pledged to the
Stillwater Bank 1,973,461 shares of the Company's common stock, par value $.10 per share (the "Prime Stock"), owned by Prime pursuant to the terms of that certain Security Agreement, effective as of April 21, 2000, between Prime and the Stillwater Bank ("Prime Security Agreement");
WHEREAS, during 2001, Prime and SBL agreed to extend the payment date of the Prime Note until April 1, 2002;
WHEREAS, as of the date of this Agreement, the outstanding principal balance due under the Prime Note is $1,350,000, and all accrued interest through October 15, 2001, has been paid in full;
WHEREAS, SBL has proposed to the Company and Prime to take in payment of $1,000,000 of the unpaid balance due under the Prime Note, one million (1,000,000) shares of a newly created series of Class C Preferred Stock of the Company ("Preferred Stock"), with each share of such new series of Preferred Stock having, among other things, .875 votes and voting as a class with the Company's common stock, par value $.10 per share ("Company's Common Stock"), a liquidation preference of $1.00 per share and cumulative dividends at the rate of six percent (6%) of the liquidation preference per annum;
WHEREAS, the Company's Board of Directors (the "Board") established a Special Committee ("Special Committee") of the Board comprised of three outside and independent members of the Board, none (i) of whom are related to J. Golsen or any members of the Golsen Family, (ii) have any business dealings with the Company or any of its subsidiaries (other than serving as a director of the Company and a subsidiary thereof) or any of the Golsen Family or entities controlled by the Golsen Family or persons related to any member of the Golsen Family;
WHEREAS, the Special Committee, with the advice of its own counsel and investment bankers, none of whom have had any previous dealings with the Company, any subsidiaries of the Company, the Golsen Family or any entities controlled by the Golsen Family, have negotiated with SBL an agreement, whereby SBL has agreed to accept in payment of $1,000,000 of the Prime Loan one million shares of a new created series of the Company's Class C Preferred Stock, no par value ("New Series of Preferred"), with such shares of the New Series of Preferred having a designation of "Series D 6% Cumulative, Convertible Class C Preferred Stock, no par value, a liquidation preference of $1.00 per share and containing such designations, preferences, voting, dividend and relative, participating, optional or other special rights and qualifications, limitations or restrictions as stated and expressed in the Certificate of Designations attached hereto as Exhibit "A" ("New Series Preferred Certificate of Designations"), subject to the terms and conditions of this Agreement;
WHEREAS, upon completion of the transaction contemplated by this Agreement, Prime will owe to SBL under the Prime Note the remaining principal sum of $350,000;
WHEREAS, the New Series of Preferred is not, and will not in the future be, publicly traded and there is no, and there will not be in the future, any market for such stock;
-2-
WHEREAS, the Company's Common Stock is listed for trading on the Over-The-Counter Bulletin Board ("OTC-BB"), and the Company is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has been subject to such filing requirements for the past ninety (90) days;
WHEREAS, SBL is an "accredited investor" and all of the equity owners of SBL are "accredited investors", as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, in reliance upon the representations made by SBL in this Agreement, the transactions contemplated by this Agreement are such that the offer and issuance of securities by the Company hereunder will be exempt from registration under the applicable U.S. federal securities laws since this is a private placement and intended to be a nonpublic offering pursuant to Section 4(2) of the Securities Act and/or Regulation D promulgated under the Securities Act; and
WHEREAS, the New Series of Preferred is not, and will not be in the future, quoted or listed for trading on any securities exchange, organized market or quotation system.
NOW THEREFORE, for and in consideration of the premises and mutual agreements contained herein, the parties hereto agree as follows:
1. Payment of $1 million of Prime Note. Subject to the terms and conditions of this Agreement, at the Closing (as defined below) Prime shall pay, and SBL shall accept, $1,000,000 as partial payment of the outstanding principal amount due under the Prime Note, with such payment not in cash but in the form of the issuance by the Company of one million shares of the New Series of Preferred, designated as Series D 6% Cumulative, Convertible Class C Preferred Stock, no par value, having a liquidation preference of $1.00 per share, with all such shares of the New Series of Preferred containing such other preferences and relative, voting, dividend, participating, optional or other special rights and qualifications, limitations or restrictions as expressed in the New Series Preferred Certificate of Designations.
2. Outstanding Principal Balance. Upon issuance by the Company of the one million shares of New Series of Preferred to SBL, the outstanding unpaid principal balance due under the Prime Note shall be $350,000. At the Closing, SBL shall deliver to Prime the original of the Prime Note and the original of any amended and restated Prime Note, all of which shall be marked "Canceled" by SBL and so executed by SBL, and Prime shall, at the Closing, execute a new amended and restated promissory note ("New Note") replacing in all respects the Prime Note, with the terms and provisions of the New Note to be substantially similar to the Prime Note, except that the principal amount of the New Note shall be $350,000, bear an annual rate of interest of 10 3/4%, be unsecured and shall provide that the principal of the New Note shall be payable on demand. A copy of the New Note to be executed by Prime at the Closing is attached hereto as Exhibit "B".
-3-
3. Conditions Precedent. The Company's and Prime's obligations under this Agreement is subject to all of the following conditions precedent being complied with:
3.1 The Stillwater Bank shall have delivered to SBL the original and all copies
thereof of the Prime Note, so that SBL can mark "Canceled" and deliver
such
to Prime at the Closing, all in a manner satisfactory to the Company; and
3.2 The Stillwater Bank and Prime shall have amended the Prime Guaranty
limiting
Prime's obligations under the Prime Guaranty to an amount not to
exceed
$350,000. In addition, Stillwater Bank shall have returned to Prime
1,000,000
shares of Prime Stock pledged by Prime to the Stillwater Bank,
and Prime
and Stillwater Bank shall have amended the Prime Security
Agreement so that
the only collateral pledged or to be pledged by Prime
under the Prime Security
Agreement or any other security agreement relating
to the Prime Guaranty or
any loans by the Stillwater Bank to SBL is 973,461
shares of the Company
Common Stock. Further, Stillwater Bank shall
amend the UCC-1 Financing
Statement that may have been filed of record by
the Stillwater Bank covering
any and all collateral, including the Prime
Stock, pledged by Prime to Stillwater
Bank, to limit the collateral pledged by
Prime to only 973,461 shares of the
Prime Stock and terminating its lien in
and to any and all other collateral. All
of the above are to be in a manner
satisfactory to the Company.
4. Closing. The consummation of this Agreement (the "Closing") will occur simultaneously with the conditions precedent set forth in Section 3 being met (the "Closing Date").
5. Representations, Warranties and Covenants of SBL. SBL hereby represents, warrants and covenants to the Company as follows:
5.1 Investment Intent. SBL represents and warrants that the shares of New
Series
of Preferred are being, and any underlying shares of Company
Common Stock
issuable upon conversion of the New Series of Preferred
("Conversion Shares")
will be, purchased or acquired solely for SBL's own
account, for investment
purposes only and not with a view toward the
distribution or resale to others.
SBL acknowledges, understands and
appreciates that the shares of New Series of
Preferred and the Conversion
Shares have not been registered under the Securities
Act by reason of a
claimed exemption under the provisions of the Securities Act
which depends,
in large part, upon SBL's representations as to investment intent,
investor
status, and related and other matters set forth herein. SBL understands
that,
in the view of the Securities Exchange Commission ("SEC"), among other
things, a purchase now with an intent to distribute or resell would represent
a
purchase and acquisition with an intent inconsistent with its representation
to the
-4-
Company, and the SEC might regard such a transfer as a deferred sale
for which
the registration exemption is not available.
5.2 Certain Risk. SBL recognizes that the acquisition of the New Series of
Preferred
involves a high degree of risk, and while the Conversion Shares are
presently
quoted and traded on the Over-The-Counter Bulletin Board, such
(i) are not
registered under applicable federal (U.S.) or state securities laws,
and thus may
bot be sold, conveyed, assigned or transferred unless registered
under such laws
or unless an exemption from registration is available under
such laws, as more fully
described herein and (ii) the New Series of Preferred
subscribed for and that are
to be acquired under this Agreement are not
quoted, traded or listed for trading or
quotation on any organized market or
quotation system, and there is therefore no
present public or other market for
the New Series of Preferred, nor can there be
any assurance that the
Conversion Shares will continue to be quoted, traded or
listed for trading or
quotation on the Over-The-Counter Bulletin Board or on any
other organized
market or quotation system.
5.3 Prior Investment Experience. SBL acknowledges that it and/or the owners
of its stock have prior investment experience, including investment in non-listed
and non-registered securities, or has employed the services of an
investment
advisor, attorney or accountant to read all of the documents
furnished or made
available by the Company to it and to evaluate the merits
and risks of such an
investment on its behalf and that it recognizes the highly
speculative nature of this
investment.
5.4 No Review by the SEC. SBL hereby acknowledges that this offering of the
New Series of Preferred has not been reviewed by the SEC because this
private
placement is intended to be an nonpublic offering pursuant to Section
4(2) of the
Securities Act and/or Regulation D promulgated under the
Securities Act.
5.5 Not Registered. SBL understands that the New Series of Preferred and the
Conversion Shares have not been registered under the Securities Act by
reason
of a claimed exemption under the provisions of the Securities Act
which depends,
in part, upon SBL's investment intention. In this connection,
SBL understands
that it is the position of the SEC that the statutory basis for
such exemption
would not be present if its representation merely meant that
its present intention
was to hold such securities for a short period, such as the
capital gains period
of tax statutes, for a deferred sale, or for any other reason
or fixed period.
-5-
5.6 No Public Market. SBL understands that there is no public market for the
New
Series of Preferred. SBL understands that although there is presently
a public
market for the Company's Common Stock, including the Conversion
Shares,
Rule 144 (the "Rule") promulgated under the Securities Act requires,
among other
conditions, a one-year holding period following full payment of
the consideration
therefor prior to the resale (in limited amounts) of securities
acquired in a nonpublic
offering without having to satisfy the registration
requirements under the Securities
Act. SBL understands that the Company
makes no representation or warranty
regarding its fulfillment in the future of
any reporting requirements under the
Exchange Act, or its dissemination to
the public of any current financial or other
information concerning the
Company, as is required by the Rule as one of the
conditions of its
availability. SBL understands and hereby acknowledges that the
Company
is under no obligation to register the New Series of Preferred or the
Conversion Shares under the Securities Act.
5.7 Sophisticated Investor. That (a) SBL has adequate means of providing for
its
current financial needs and possible contingencies; (b) SBL is able to bear
the
economic risks inherent in an investment in the New Series of Preferred
and that an
important consideration bearing on its ability to bear the
economic risk is whether
SBL can afford a complete loss of its investment in
the New Series of Preferred
and SBL represents and warrants that SBL can
afford such a complete loss; and
(c) SBL has such knowledge and experience
in business, financial, investment
and banking matters (including, but not
limited to, investments in restricted, non-
listed and non-registered securities)
that SBL is capable of evaluating the merits,
risks and advisability of an
investment in the New Series of Preferred.
5.8 Tax Consequences. SBL acknowledges that the Company has made no
representation regarding the potential or actual tax consequences for SBL
which
will result from entering into the Agreement and from consummation
of the
transaction contemplated hereunder. SBL acknowledges that it bears
complete
responsibility for obtaining adequate tax advice regarding this
Agreement.
5.9 SEC Filing. SBL acknowledges that it and its equity owners have been
previously
furnished with true and complete copies of the following
documents which have
been filed with the SEC pursuant to Sections 13(a),
14(a), 14(c) or 15(d) of the
Exchange Act.
(i) Annual Report on Form 10-K for the year ended December 31,
2000
(the "Form 10-K"); (ii) Current Reports on Form 8-K, filed
during 2001;
(iii) Quarterly Reports on Form 10-Q for the quarter
ended March 31, 2001
-6-
and June 30, 2001; (iv) the Company's Proxy
Statement for the 2001
Annual Meeting of Shareholders; and (v) the
information contained in any
reports or documents required to be
filed by the Company under Sections
13(a), 14(a), 14(c) or 15(d) of
the Exchange Act since the distribution of
the Form 10-K.
5.10 Documents, Information and Access. SBL's decision to acquire the New
Series of Preferred in payment of $1,000, 000 of the Prime Note is not based
on any promotional, marketing or sales materials, and SBL and its
representatives
have been afforded, prior to purchase thereof, the opportunity
to ask questions
of, and to receive answers from, the Company and its
management, and has had
access to all documents and information which
SBL deems material to an
investment decision with respect to the purchase
of New Series of Preferred
hereunder.
5.11 No Registration, Review or Approval. SBL acknowledges and understands
that the private offering and sale of securities pursuant to this Agreement has
not
been reviewed or approved by the SEC or by any state securities
commission,
authority or agency, and is not registered under the Securities
Laws. SBL
acknowledges, understands and agrees that the shares of New
Series of
Preferred are being offered and exchanged hereunder pursuant to (x)
a private
placement exemption to the registration provisions of the Securities
Act
pursuant to Section 4(2) of such Securities Act and/or Regulation D
promulgated
under the Securities Act and (y) a similar exemption to the
registration
provisions of applicable state securities law.
5.12 Transfer Restrictions. SBL will not transfer any New Series of Preferred
purchased until this Agreement or any Conversion Shares required unless
such
are registered under the Securities Laws, or unless an exemption is
available
under such Securities Laws, and the Company may, if it chooses,
where an
exemption from registration is claimed by such Subscriber,
condition any
transfer of New Series of Preferred or Conversion Shares out
of SBL's name
on receipt of an opinion of the Company's counsel, to the
effect that the
proposed transfer is being effected in accordance with, and
does not violate,
an applicable exemption from registration under the
Securities Laws, or an
opinion of counsel to SBL, which opinion is
satisfactory to the Company, to
the effect that registration under the
Securities Act is not required in connection
with such sale or transfer and the
reasons therefor.
5.13 No Commission. SBL agrees and acknowledges that no commissions or
other
remuneration is being paid or given directly or indirectly for soliciting
the Exchange.
-7-
5.14 Reliance. SBL understands and acknowledges that the Company is relying
upon
all of the representations, warranties, covenants, understandings,
acknowledgments
and agreements contained in this Agreement in
determining whether to accept this
subscription and to issue the New Series
of Preferred to SBL.
5.15 Accuracy or Representations and Warrants. All of the representations,
warranties, understandings and acknowledgments that SBL has made herein
are
true and correct in all material respects as of the date of execution hereof.
SBL
will perform and comply fully in all material respects with all covenants
and
agreements set forth herein, and SBL covenants and agrees that until the
acceptance
of this Agreement by the Company, SBL shall inform the
Company immediately
in writing of any changes in any of the representations
or warranties provided or
contained herein.
5.16 Indemnity. SBL hereby agrees to indemnify, defend and hold harmless the
Company,
Prime and their respective successors and assigns, from and
against any demands,
claims, actions or causes of action, assessments,
liabilities, losses, costs, damages,
penalties, charges, fines or expenses
(including, without limitation, interest, and attorney
and accountants' fees,
disbursements and expenses), arising out of or relating to or in
connection
with (i) any breach by SBL of any representation, warranty, covenant or
agreement made by SBL in this Agreement or (ii) the $1,000,000 of the
Prime Note
being paid with the New Series of Preferred or (iii) any sale or
distribution by SBL
of the New Series of Preferred or Conversion Shares in
violation of the Securities
Act or any applicable state securities or blue sky
laws (collectively, the "Securities
Laws"). Such right to indemnification
shall be in addition to any and all other rights
of the Company or Prime under
this Agreement or otherwise, at law or in equity.
5.17 Survival. SBL expressly acknowledges and agrees that all of its
representations,
warranties, agreements and covenants set forth in this
Agreement shall be of the
essence hereof and shall survive the execution,
delivery and Closing of this
Agreement, the sale, purchase, and conversion,
if any, of the New Series of
Preferred, and the sale of the Conversion Shares.
6. Representations, Warranties and Covenants of the Company. In order to induce SBL to enter into this Agreement and to consummate the transactions contemplated by this Agreement, the Company and Prime hereby represent, warrant, and covenant to SBL as follows:
6.1 Organization, Authority, Qualification. The Company is a corporation
duly
incorporated and in good standing under the laws of the State of
Delaware. Prime
-8-
is a corporation duly incorporated and in good standing
under the laws of the
State of Oklahoma.
6.2 Authorization. The Company and Prime have full power and authority to
execute and
deliver this Agreement and to perform its obligations under and
consummate the
transactions contemplated by this Agreement.
6.3 No Commission. The Company and Prime agree and acknowledge that no
commission
is being paid or given directly or indirectly for soliciting this
Agreement.
6.4 Ownership of, and Title to, Securities. The New Series of Preferred to be
issued
hereunder are, and all Conversion Shares, when issued, will be, duly
authorized, validly
issued, fully paid and nonassessable shares of the capital
stock of the Company, free
of personal liability.
7. Securities, Legends and Notices. SBL represents and warrants that it has read, considered and understood the following legends, and agrees that such legends, substantially in the form and substance set forth below, shall be placed on all of the certificates representing the New Series of Preferred:
New Series of Preferred Legends
NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN
EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER
ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR
WRITTEN
CONSENT OF LSB INDUSTRIES, INC. AND AN OPINION OF LSB
INDUSTRIES,
INC.'S COUNSEL, OR AN OPINION FROM COUNSEL FOR THE
HOLDER HEREOF,
WHICH OPINION IS SATISFACTORY TO THE COMPANY,
THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER
APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM.
-9-
Conversion Shares Legends.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
(THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE
STATE
SECURITIES LAWS. THIS COMMON STOCK MAY NOT BE OFFERED,
SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION IN
EFFECT WITH RESPECT THERETO UNDER THE
SECURITIES ACT AND UNDER
ANY APPLICABLE STATE SECURITIES LAW
OR WITHOUT THE PRIOR WRITTEN
CONSENT OF LSB INDUSTRIES, INC.
AND AN OPINION OF LSB INDUSTRIES,
INC.'S COUNSEL, OR AN OPINION
FROM COUNSEL FOR THE HOLDER HEREOF,
WHICH OPINION IS
SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION AND
QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE
FEDERAL AND
STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM.
8. Miscellaneous.
8.1 Amendment; Waiver. This Agreement shall not be changed, modified or
amended
in any respect except by the mutual written agreement of the parties
hereto. Any
provision of this Agreement may be waived in writing by the party
which is entitled
to the benefits thereof. No waiver of any provision of this
Agreement shall be
deemed to, or shall constitute a waiver of, any other provision
hereof or thereof
(whether or not similar), nor shall any such waiver constitute
a continuing waiver.
8.2 Binding Effect; Assignment. Neither this Agreement, nor any rights or obligations
hereunder are assignable by
SBL.
8.3 Governing Law; Litigation Costs. This Agreement and its validity, construction
and
performance shall be governed in all respects by the internal laws of the State of
Oklahoma, except with respect to corporate law issues as to the Company relating to
the authorization, issuance and validity of the New Series of Preferred and the
Conversion Shares which shall be governed by the Delaware General Corporation
Laws, without giving effect to such states' conflicts of laws provisions.
8.4 Headings The captions, headings and titles preceding the text of each or any
Section,
subsection or paragraph hereof are for convenience of reference only and
shall not
affect the construction, meaning or interpretation of this Agreement or the
Warrants
or any term or provisions hereof or thereof.
8.5 Counterparts This Agreement may be executed in one or more original or facsimile
counterparts, each of which shall be deemed an original and all of which shall be
-10-
considered one and the same agreement, binding on all of the parties hereto,
notwithstanding that all parties are not signatories to the same counterpart.
8.6 Transfer Taxes. Each party hereto shall pay all such sales, transfer, use, gross
receipts, registration and similar taxes arising out of, or in connection with, the
transactions contemplated by this Agreement (collectively, the "Transfer Taxes")
as
are payable by such party under applicable law.
8.7 Entire Agreement. This Agreement, along with the New Series Preferred
Certificate of Designations, merges and supersedes any and all prior agreements,
understandings, discussions, assurances, promises, representations or warranties
among the parties with respect to the subject matter hereof, and contains the entire
agreement among the parties with respect to the subject matter set forth herein and
therein.
8.8 Notices. Except as otherwise specified herein to the contrary, all notices, requests,
demands and other communications required or desired to be given hereunder shall
only be effective if given in writing, by hand or by fax, by certified or registered
mail,
return receipt requested, postage prepaid, or by U.S. Express Mail service, or
by
private overnight mail service (e.g., Federal Express). Any such notice shall be
deemed
to have been given (i) on the business day actually received if given by hand
or by fax,
(ii) on the business day immediately subsequent to mailing, if sent by U.S.
Express
Mail service or private overnight mail service, or (iii) five (5) business days
following
the mailing thereof, if mailed by certified or registered mail, postage
prepaid, return
receipt requested, and all such notices shall be sent to the following
address (or to such
other address or addresses as a party may have advised the other
in the manner
provided in this Section 8.8):
If to the Company or Prime: Mr. Tony M. Shelby
LSB Industries, Inc.
16 South Pennsylvania
P. O. Box 754
Oklahoma City, Oklahoma 73102
If to SBL Corporation: Mr. Jack E. Golsen
President
SBL Corporation
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73107
-11-
8.9 No Third Party Beneficiaries. This Agreement and the rights, benefits, privileges,
interests, duties and obligations contained or referred to herein shall be solely for the
benefit of the parties hereto and no third party shall have any rights or benefits
hereunder as a third party beneficiary or otherwise hereunder.
IN WITNESS WHEREOF, the Company, Price and SBL have each duly executed this Agreement on the ___ day of October, 2001.
LSB INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Tony M. Shelby
Tony M. Shelby
Senior Vice President
PRIME FINANCIAL CORPORATION,
an Oklahoma corporation
By: /s/
Tony M.
Shelby
Tony
M. Shelby
President
SBL CORPORATION,
an Oklahoma corporation
By: /s/
Jack E. Golsen
Jack E. Golsen
President
State of Delaware
Office of the Secretary of State
_________________________
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "LSB INDUSTRIES, INC.", FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF NOVEMBER, A.D. 2001, AT 2:30 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS.
/s/
Harriet Smith
Windsor
Harriet
Smith Windsor, Secretary of State
0833781
8100 AUTHENTICATION:
1449949
010580186 DATE:
11-15-01
OF
LSB INDUSTRIES, INC.
LSB Industries, Inc. (the "Corporation" or "LSB"), a corporation organized and existing under the Delaware General Corporation Law, hereby certifies pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, that the following resolutions relating to the issuance of a new series of Class C Preferred Stock, no par value, of the Corporation consisting of 1,000,000 shares were duly adopted by a Special Committee of the members of the Board of Directors of the Corporation at a meeting held on October 9, 2001, pursuant to resolutions of the whole Board of Directors of the Corporation.
RESOLVED, that pursuant to authority expressly granted to and
vested in the Board
of Directors of LSB Industries, Inc. ("LSB" or the
"Corporation") by the provisions
of the Restated Certificate of
Incorporation of LSB, the Board of Directors of LSB
does hereby
create, and LSB may issue, pursuant to the terms of the Agreement,
dated October 18, 2001, between LSB, Prime Financial Corporation,
an Oklahoma
corporation ("Prime") and a wholly owned subsidiary
of LSB, and Stillwater National
Bank and Trust Company
("Stillwater Bank") (the "Agreement"), from LSB's Class
C Preferred
Stock, no par value, a new series consisting of 1,000,000 shares
designated as "Series D 6% Cumulative, Convertible Class C
Preferred Stock,"
no par value, and hereby fixes the designations,
preferences, rights and privileges of
such Series D 6% Cumulative,
Convertible Class C Preferred Stock and the
qualifications,
limitations or restrictions thereof, as follows:
1. Designation. The shares of this series of Class C Preferred
Stock shall be
designated as "Series D 6% Cumulative, Convertible
Class C Preferred Stock"
(hereinafter called "Series D Preferred
Stock"), having no par value, with said
Series D Preferred Stock to
consist of one million (1,000,000) shares.
2. Dividends; Cumulative. The holders of shares of the Series
D Preferred Stock
shall be entitled to receive cash dividends, but only
when, as and if declared by the
Board of Directors of LSB, in a
manner as permitted by law, at the rate of six percent
STATE OF
DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 02:30 P.M. 11/15/2001
010580186 - 0833781
(6%) per annum
of the Liquidation Preference (as defined below) of such Series D
Preferred Stock and no more, payable annually on such date in each
year as shall be
fixed by the Board of Directors of LSB ("Cash
Dividends").
If Cash Dividends on the Series D Preferred Stock for any
year shall not have been
paid or set apart in full for the Series D
Preferred Stock, the aggregate deficiency shall be
cumulative and
shall be paid or set apart for payment before any dividends shall be
paid
upon or set apart for payment for any class of common stock of
LSB (other than a
dividend payable in common stock of LSB).
Any accumulation of dividends on the Series D Preferred
Stock shall not bear interest.
The holders of Series D Preferred Stock
shall not be entitled to receive any dividends
thereon other than the
dividends provided for in this paragraph 2.
Cash Dividends on Series D Preferred Stock shall be declared
if, when and as the
Board of Directors shall in their sole discretion
deem advisable, and only from the net
profits or surplus of the
Corporation, in a manner as permitted by law as such shall be fixed
and determined by the said Board of Directors. The determination of
the Board of Directors
at any time of the amount of net profits or
surplus available for a Cash Dividend shall be
binding and conclusive
on the holders of all the Series D Preferred Stock of the
Corporation at the time outstanding.
Except as otherwise provided in the last paragraph of this
Section 2, when dividends
are not paid in full upon the shares of this
Series D Preferred Stock and any other preferred
stock of LSB
ranking on a parity as to dividends with this Series D Preferred Stock,
all
dividends declared upon shares of this Series D Preferred Stock
and any other preferred
stock of LSB ranking on a parity as to
dividends with Series D Preferred Stock shall be
declared pro rata so
that the amount of dividends declared per share on this Series D
Preferred Stock and such other preferred stock shall in all cases bear
to each other the
same ratio that accrued dividends per share on the
shares of this Series D Preferred Stock
and such other preferred stock
bear to each other; provided, however, that dividends
on preferred
stock that provides for non-cumulative dividends shall be entitled to
participate, and shall rank on a parity, to the extent of dividends due
in the then current
period for which such dividends are paid. Holders
of share of Series D Preferred
-2-
Stock shall not be entitled to any
dividends, whether payable in cash, property or
stock, in excess of the
full cumulative dividends, as herein provided, on this Series
D
Preferred Stock. No interest or sum of money in lieu of interest, shall
be
payable in respect of any dividend payment or
payments on this
Series D
Preferred Stock which may be in arrears.
Notwithstanding anything herein to the contrary, if at any time
any dividend on LSB's
then outstanding $3.25 Convertible
Exchangeable Class C Preferred Stock, Series 2
($3.25 Preferred")
shall be in default, in whole or in part, then no dividend shall be paid
or declared and set apart for payment on the Series D Preferred Stock
unless and until all
cumulative accrued and unpaid dividends with
respect to such $3.25 Preferred shall have
been paid or declared and
set apart for payment.
3. No Preemptive Rights. No holder of the Series D Preferred
Stock shall have any
preemptive rights. No holder of the Series D
Preferred Stock shall be entitled to purchase
or subscribe for any part
of the unissued stock of LSB or of any stock of LSB to be issued
by
reason of any increase of the authorized capital stock of LSB, or to
purchase or
subscribe for any bonds, certificates of indebtedness,
debentures or other securities
convertible into or carrying options or
warrants to purchase stock or other securities
of LSB or to purchase
or subscribe for any stock of LSB purchased by LSB or by its
nominee or nominees, or to have
any other preemptive rights now or
hereafter defined
by the laws of the State of Delaware.
4. Preference on Liquidation, etc. In the event of any voluntary
or involuntary liquidation,
dissolution or winding up of LSB, or any
reduction in its capital resulting in any distribution
of
assets to its
stockholders, the holders of the Series D Preferred Stock shall be
entitled
to receive in cash out of the assets of LSB, whether from
capital or from earnings, available
for
distribution to its stockholders,
before any amount shall be paid to the holders of the
common
stock
of LSB, the sum of One and No/100 Dollar ($1.00), per share
("Liquidation
Preference"), plus an amount equal to all accumulated
and unpaid Cash Dividends thereon as
of the date fixed for payment
of such distributive amount. The purchase or redemption by
LSB of
stock of any class, in any manner permitted by law, shall not for the
purpose of this
paragraph be regarded as a liquidation, dissolution or
winding up of LSB or as a reduction of
its capital. Neither the
consolidation nor merger of LSB with or into any other corporation
or
-3-
corporations, nor the sale or transfer by LSB of all or any part of
its assets, shall be deemed
to be a liquidation, dissolution or winding
up of LSB for the purpose of this paragraph. A
dividend or
distribution to stockholders from net profits or surplus earned after
the date of
any reduction of capital shall not be deemed to be a
distribution resulting from such
reduction in capital. No holders of
Series D Preferred Stock shall be entitled to receive or
participate in
any amounts with respect thereto upon any liquidation, dissolution or
winding
up of LSB other than the amounts provided for in this
paragraph. If, in the event of any
such liquidation, dissolution or
winding up of LSB, there shall be shares of more than one
class or
series of preferred stock outstanding, and such other class or classes
or series of
preferred stock by their terms have a parity with the
Series D Preferred Stock, and in such
event there shall be assets
distributable upon all shares of the Series D Preferred Stock
and of
such other classes or series of preferred stock in an amount less than
the amount
of which the holders thereof are entitled, then any amount
available to be paid upon all
such shares of preferred stock (including
the Series D Preferred Stock) shall be divided
among said classes or
series of preferred stock in proportion to the aggregate amounts
which
would have been paid to the holders of the shares of each class or
series had they
received payment in the full amount to which they
would be entitled in such event.
5. Voting Rights. Subject to the provisions of this paragraph 5,
at every meeting of
stockholders of LSB each holder of the Series D
Preferred Stock shall be entitled to one
(1) vote for each share of
Series D Preferred Stock held of record in his, her or its name
on all
matters submitted to a vote of the stockholders of LSB. The Series
D Preferred
Stock, the Common Stock (as defined below) of LSB,
LSB's Series B 12% Cumulative,
Convertible Preferred Stock, par
value $100.00 per share, and LSB's Series of Convertible
Non-Cumulative Preferred Stock, par value $100.00 per share, shall vote
together as
one class.
6. Conversion Privileges. Subject to the terms of this paragraph
6, the holder of record
of any share or shares of Series D Preferred
Stock shall have the right at any time, at his,
her or its option and
election, to convert four (4) shares of Series D Preferred Stock
into
one (1) share of LSB common stock, par value $0.10 per share
("Common
Stock"), (equivalent to a conversion price of $4.00 per
share of LSB Common Stock)
on the following terms and
conditions:
-4-
(a) LSB shall at the time of such conversion pay to the
holder of record of any share
or shares of Series D Preferred Stock
any accrued but unpaid dividends on said Series D
Preferred Stock so
surrendered for conversion, except: (i) as otherwise limited by law or
by any agreement or instrument to which LSB is a party or may be
bound by (including, but
not limited to, this Certificate of
Designations), and (ii) that the amount of the dividend paid
for the
then current annual dividend period in which such conversion occurs
shall be pro-
rated for that portion of such year that has elapsed prior
to the time the holder of such
share or shares of Series D Preferred
Stock exercises his, her or its rights of conversion. If
LSB is limited
by law from paying such accrued but unpaid dividends, in whole or
in part,
on the share or shares of Series D Preferred Stock surrendered
for conversion at the time
such are surrendered for conversion, then
LSB shall only be required to pay that amount
of such accrued but
unpaid dividends as allowed by such law at the time of such
conversion
and no more. If LSB is limited under any agreement
(including, but not limited to, this
Certificate of Designations) from
paying such accrued but unpaid dividends, in whole or in
part, on the
share or shares of Series D Preferred Stock surrendered for
conversion at the
time such are surrendered for conversion, then LSB
shall pay to the holder of record thereof
that portion of such accrued
but unpaid dividends that LSB is unable to pay on such share
or
shares of Series D Preferred Stock at the time such are surrendered
for conversion due
to said agreement ("Unpaid Dividends") when
LSB is no longer prohibited from paying such
Unpaid Dividends
under an agreement and prior to any dividends being paid upon or set
apart for payment for any class of Common Stock of LSB (other than
a dividend payable
in Common Stock of LSB); and in connection
therewith, LSB and such holder shall, at
the time of such conversion,
enter into a separate contract, the terms of which are to be
satisfactory
to LSB and such holder, evidencing LSB's obligation to pay to the
holder
thereof the Unpaid
Dividends (without interest) after such
conversion when LSB is no
longer prohibited from paying such under
an agreement and prior to any dividends
being paid upon or set apart
for payment for any class of Common Stock of LSB (other
than a
dividend payable in Common Stock of
LSB).
(b) In the event that LSB shall (i) pay to the holders of its
Common Stock a stock
dividend payable in its Common Stock, the
number of shares of Common Stock issuable
upon conversion of the
Series D Preferred Stock shall be proportionately adjusted, effective
as of the date of payment of such stock dividend; or (ii) have a stock
split, reclassification,
-5-
recapitalization, combination of outstanding
shares or similar corporate rearrangement (other
than a stock dividend
which is provided for in (i) above), without any consideration therefor
being received by LSB, increasing or decreasing the number of shares
of LSB's Common
Stock, the number of shares of Common Stock
issuable upon conversion of the Series D
Preferred Stock shall be
proportionately increased or decreased, effective as of the date of
the
payment of or happening of such event; or (iii) be consolidated with
or merge into
another
corporation, in which LSB is the non-surviving
corporation, or sell all or
substantially all of LSB's assets as an
entirety under one plan or arrangement to another
corporation and
such consolidation, merger or sale shall be effected in such a way that
holders of LSB's Common Stock shall be entitled to receive stock,
securities or assets
with respect to or in exchange for such Common
Stock, then after the effective date
of such consolidation, merger or
sale each share of Series D Preferred Stock shall
be convertible into
(in lieu of LSB Common Stock) the number of shares of stock
or
other securities or assets to which such holder of the Series D
Preferred Stock
would have been entitled to upon such consummation
as if the holder of the Series D
Preferred Stock had so exercised his,
her or its right of conversion under such Series
D Preferred Stock
immediately prior to such consolidation, merger or sale, and LSB
shall make lawful provision therefor as part of such consolidation,
merger or sale.
(c) LSB shall not be required to issue any fraction of a
share of Common Stock upon
any conversion, but (i) may deliver
scrip therefor, which shall not entitle the bearer thereof
to vote, or to
receive dividends or to any other or further right or interest, except to
convert the same in amounts aggregating one or more whole shares
of LSB Common
Stock at any time within a period, fixed by the
Board of Directors of LSB, which shall
be stated in the scrip, or (ii)
may pay in cash therefor an amount equal to the same fraction
of the
fair market value of a full share of LSB Common Stock. For such
purpose of
determining the fair market value of LSB Common Stock,
the fair market value of a share
of LSB Common Stock, shall be the
last recorded sale price of such a share of LSB
Common Stock on a
national securities exchange on the day immediately preceding the
date upon which such Series D Preferred Stock is surrendered for
conversion or, if there
be no recorded sale price on such day, the last
quoted bid price per share of LSB
Common Stock on such exchange at the close of trading on such date. If LSB Common
Stock shall not
be at the time dealt in on a national security exchange, such fair
market
-6-
value of LSB Common Stock shall be the prevailing market
value of such Common Stock
on any other securities exchange or in
the open market, as determined by LSB, which
determination shall be
conclusive.
(d) Any holder of a share or shares of Series D Preferred
Stock desiring to convert
such Series D Preferred Stock into Common
Stock of LSB shall surrender the certificate or
certificate representing
the share or shares of Series D Preferred Stock so to be converted,
duly endorsed to LSB in blank, with the signature of said
endorsement guaranteed by a
national bank or investment banking
firm, at the principal office of LSB (or such other place
as may be
designated by LSB), and shall give written notice to LSB at said
office that he
elects to convert the same, and setting forth the name or
names (with the address or
addresses) in which the shares of
Common Stock are to be issued.
(e) The issuance of certificates for shares of Common
Stock upon conversion of the
Series D Preferred Stock shall be made
without charge for tax in respect of such issuance;
however, if any
certificate is to be issued in any name other than that of the holder of
record
of the Series D Preferred Stock so converted, the person or
persons requesting the issuance
thereof shall pay to LSB the amount
of any tax which may be payable in respect of any
transfer involved
in such issuance, or shall establish to the satisfaction of LSB that such
tax
has been paid or is not due and payable.
7. Redemption. There shall be no mandatory or optional
redemption rights with respect to
the Series D Preferred Stock.
8. Status of Reacquired Shares. Shares of the Series D Preferred
Stock which have been
issued and reacquired in any manner (until
LSB elects to retire them) shall (upon compliance
with any applicable
provisions of the laws of the State of Delaware) have the status of
authorized and unissued shares of the class of Class C Preferred Stock
of LSB undesignated
as to series and may be redesignated and
reissued.
9. Priority. (a) For purposes of this resolution, any stock of any
class or series of LSB
shall be deemed to rank:
(i) Prior or senior to the shares of this Series D
Preferred Stock either as to
dividends or upon liquidation, if
the holders of such class or classes shall be entitled
-7-
to the
receipt of dividends or of amounts distributable upon
dissolution, liquidation or
winding up of LSB, whether
voluntary or involuntary, as the case may be, in preference
or
priority to the holders of shares of this Series D Preferred
Stock;
(ii) On a parity with or equal to shares of this Series D
Preferred Stock, either as to
dividends or upon liquidation,
whether or not the dividend rates, dividend payment dates
or
redemption or liquidation prices per share or sinking fund
provisions, if any, are
different from those of this Series D
Preferred Stock, if the holders of such stock are
entitled to the
receipt of dividends or of amounts distributable upon
dissolution,
liquidation or winding up of LSB, whether
voluntary or involuntary, in proportion to
their respective
dividend rates or liquidation prices, without preference or
priority, one
over the other, as
between the holders of such
stock and the holders of shares of this
Series D Preferred Stock; and
(iii) Junior to shares of this Series D Preferred Stock,
either as to dividends or upon
liquidation, if such class or
series shall be Common Stock or if the holders of shares of
this Series D Preferred Stock shall be entitled to receipt of
dividends or of amounts
distributable
upon dissolution,
liquidation or involuntary, as the case may be, in
preference
or priority to the holders of shares of such class or series.
10. Miscellaneous. The shares of the Series D Preferred
Stock shall not be subject to the
operation of or to the benefit of any
retirement or sinking fund. The shares of the Series D
Preferred Stock shall not have any other relative, participating, optional or other
rights and
powers not set forth above.
-8-
IN WITNESS WHEREOF, this Corporation has caused this Certificate of Designations to be signed and attested by its duly authorized officers this 18th day of October, 2001.
LSB INDUSTRIES, INC.
By: /s/
Jack E. Golsen
Jack
E. Golsen, President
/s/ David M.
Shear
David M. Shear, Secretary
-9-
PROMISSORY NOTE - Fixed or Variable Rate - Commerical
| DEBTOR(S) NAME AND ADDRESS Prime Financial Corporation 16 South Pennsylvania Oklahoma City, Oklahoma 73107 |
NOTE NUMBER
3 |
DATE OF
NOTE 10/18/01 |
MATURITY
DATE On Demand |
PRINCIPAL AMOUNT $350,000.00 | ||
| CUSTOMER NUMBER | [ ] NEW LOAN
[X]RENEWAL OF LOAN(S) NUMBER: 2 |
OFFICER | ||||
| [X] FIXED
INTEREST RATE
PER ANNUM 10.75 % |
[ ]VARIABLE INTEREST RATE INDEX__________________ |
PRESENT INDEX
RATE_________% MARGIN OVER INDEX__________% INITIAL PER ANNUM RATE_____% | ||||
| COLLATERAL CATEGORIES:
| ||||||
| PAYMENT TERMS | [ ] SINGLE PAYMENT INCLUDING UNPAID AND
ACCRUED INTEREST
PAYABLE:______________________
[X] INSTALLMENT PAYMENTS AS FOLLOWS: On demand with interest paid monthly in arrears on the 15th day of each month |
This Note amends and restates that certain Promissory Note dated 03/05/98 in the principal amount of $3,000,000.00 made by Debtor in favor of Lender which is superseded herein. | ||||
PROMISE TO PAY. For value received, the undersigned Debtor, whether one or more, and jointly and severally if more than one, agrees to the terms of this Note and promises to pay to the order of the Lender named below at its place of business as indicated in this Note or at such other place as may be designated in writing by the Lender, the Principal Amount of this Note together with interest on the unpaid Principal Amount until Maturity at the per annum interest rate or rates stated above and according to the Payment Terms stated in this Note. Interest on this Note is calculated on the actual number of days elapsed on a basis of a 360 day year unless otherwise indicated above. For purposes of computing interest and determining the date principal and interest payments are received, all payments will be deemed made only when received in collected funds. Payments are applied first to accrued and unpaid interest and other charges, and then to unpaid Principal Amount. In this Note, "Debtor" includes any party liable under this Note, including endorsers, co-makers, guarantors and otherwise, and "Lender" includes all subsequent holders.
VARIABLE RATE. If this is a Variable Rate transaction as indicated above, the interest rate shall vary from time to time with changes (whether increases or decreases) in the Index Rate shown above. The interest rate on this Note will be the Index Rate plus a Margin, if any, as indicated above. Each change will become effective on the same date the Index Rate changes unless a different effective date is indicated above. If the Index Rate is Lender's base or prime rate, it is determined by Lender in its sole discretion, primarily on a basis of its cost of funds, is not necessarily the lowest rate Lender is charging its customers, and is not necessarily a published rate.
PAYMENTS NOT MADE WHEN DUE. Any principal and/or interest amount not paid when due shall bear interest at a rate of 6 percent per annum greater than the per annum interest rate prevailing on this Note at the time the unpaid amount came due, but in no event at a rate less than 15 percent per annum. In addition or in the alternative to the interest rate provided for in this paragraph Lender may assess a charge of $10.00 times the number of days late to cover cost of past due notices and other added expenses. In no event shall the interest rate and related charges either before or after maturity be greater than permitted by law.
ALL PARTIES PRINCIPALS. All Debtors shall each be regarded as a principal and each Debtor agrees that any party to this Note, with Lender's approval and without notice to any other party, may from time to time renew this Note or consent to one or more extensions or deferrals of the Maturity Date for any term(s) or to any other modification(s), and all Debtors shall be liable in same manner as on the original note.
ADVANCES AND PAYMENTS. It is agreed that the sum of all advances under this Note may exceed the Principal Amount as shown above, but the unpaid balance shall never exceed said Principal Amount. Advances and payments on this Note shall be recorded on records of Lender and such records shall be prima facie evidence of such advances, payments and unpaid principal balance. Subsequent advances and the procedures described in this Note shall not be construed or interpreted as granting a continuing line of credit for Principal Amount. Lender reserves the right to apply any payment by Debtor, or for account of Debtor, toward this Note or any other obligation of Debtor to Lender.
PREPAYMENT. Except as otherwise provided in this Note, Debtor shall have the right to prepay all or any part of principal due under this Note at any time without penalty, subject to the following conditions: (a) all interest must be paid through the date of any prepayment; and (b) if this Note provides for monthly or other periodic payments, there will be no changes in the due dates or amounts following any partial prepayment unless Lender agrees to such changes in writing.
COLLATERAL. This Note and all other obligations of Debtor to Lender, including renewals and extensions, are secured by all collateral securing this Note and by all other security interests and mortgages previously or later granted to Lender and by all money, deposits and other property owned by any debtor and in Lender's possession or control.
ACCELERATION. At option of Lender, the unpaid balance of this Note and all other obligations of Debtor to Lender, whether direct or indirect, absolute or contingent, now existing or later arising, shall become immediately due and payable without notice or demand, upon or after the occurrence or existence of any of the following events or conditions: (a) any payment required by this Note or by any other note or obligation of Debtor to Lender or to others is not made when due, or any event or condition occurs or exists which results in acceleration of the maturity of any loan agreement or in any instrument or document securing or relating to this Note or any other note or obligation of Debtor to Lender or to others; (c) any warranty, representation, financial information or statement made or furnished to Lender by or on behalf of Debtor proves to have been false in any material respect when made or furnished; (d) any levy, seizure, garnishment or attachment is made against any asset of any Debtor; (e) Lender determines, at any time and in Lender's sole discretion, that the prospect of payment of this Note is impaired; (f) whenever, in Lender's sole judgment, the collateral for the debt evidenced by this Note becomes unsatisfactory or insufficient either in character or value and, upon request, Debtor fails to provide additional collateral as required by Lender; (g) all or any part of the collateral for the debt evidenced by this Note is lost, stolen, substantially damaged or destroyed; (h) death, incompetency, dissolution, change in ownership or senior management, or termination of existence of any Debtor; or (i) a receiver is appointed over all or any part of Debtor's property, or any Debtor makes an assignment to the benefit of creditors, files for relief under any bankruptcy or insolvency laws, or becomes subject to any involuntary proceeding under such laws.
RIGHT OF OFFSET. Except as otherwise restricted by law, any indebtedness due from Lender to Debtor, including, without limitation, any deposits or credit balances due from Lender, is pledged to secure payment of this Note and any other obligation to Lender of Debtor, and may at any time when the whole or any part of such obligation(s) remain(s) unpaid, either before or after Maturity of this Note, be set off, appropriated, held or applied toward the payment of this Note or any other obligation to Lender by any Debtor.
ADDITIONAL PROVISIONS. (1) Debtor agrees, if requested, to furnish to Lender copies of income tax returns as well as balance sheets and income statements for each fiscal year following the Date of Note and at more frequent intervals as Lender may require. (2) No waiver by Lender of any payment or other right under this Note or any related agreement or documentation shall operate as a waiver of any other payment or right. All Debtors waive presentment, notice of acceleration, notice of dishonor and protest and consent to substitutions, releases and failure to perfect as to collateral and to additions or releases of any Debtor. (3)This Note and the obligations evidenced by it are to be construed and governed by the laws of the state indicated in Lender's address shown in this Note. (4) All Debtors agree to pay costs of collection, including, as allowed by law, an attorney's fee equal to a minimum of 15% of all sums due upon default or such other maximum fee as allowed by law. (5) All parties signing below acknowledge receiving a completed copy of this Note and related documents, which contain the complete and entire agreement between Lender and any party liable for payment under this Note. No variation, condition, modification, change or amendment to this Note or related documents shall be binding unless in writing and signed by all parties. No legal relationship is created by the execution of this Note and related documents except that of debtor and creditor or as stated in writing.
|
LENDER NAME AND ADDRESS |
DEBTOR(S) SIGNATURE(S) |
| SBL Corporation P.O. Box 705 Oklahoma City, Oklahoma 73101-0705 |
Prime Financial Corporation
By:___________________________________________ Vice President Exhibit B |
In consideration of SBL Corporation ("SBL"), an Oklahoma corporation, extending credit
to Prime Financial Corporation ("PFC"), an Oklahoma corporation and subsidiary of LSB Industries,
Inc. ("Guarantor"), a Delaware corporation, the Guarantor, on this 18th day of October, 2001, does
hereby guarantee PFC's payment obligations to SBL and all renewals and extensions thereof arising
under that certain Promissory Note dated October 18, 2001, in the principal amount of Three
Hundred Fifty Thousand and No/100 Dollars ($350,000.00), made by PFC in favor of SBL. The
obligations of the Guarantor under this Guaranty shall be enforceable by SBL only after PFC has
defaulted in the performance of its payment obligations to SBL, and notice of such default has been
given to the Guarantor by SBL.
This Guaranty supersedes that certain Limited Guaranty dated March 5, 1998 given by Guarantor in favor of SBL and will expire upon the full performance of the payment obligations of PFC to SBL.
The Guarantor acknowledges to SBL that PFC is a wholly owned subsidiary of the Guarantor and is therefore directly and financially interested in PFC and its business and the consideration for this Guaranty.
This Guaranty shall be binding upon the undersigned Guarantor, its heirs, legal representatives, successors, and assigns, and shall inure to the benefit of SBL and its successors and assigns.
In witness whereof, this Guaranty is executed and delivered as of the date above indicated.
Attest: LSB Industries, Inc.
/s/ David M.
Shear
By /s/ Tony M.
Shelby
Secretary Title: V.P.
guarante\lsb\pfc_01.1018
DELAWARE
No. **** Shares *****
The shares represented by this Certificate are subject to certain restrictions
THIS CERTIFIES THAT - - S P E C I M E N - - is the owner of ********** shares of Preferred Stock each of the Capital Stock of LSB Industries, Inc. designated as Series D 6% Cumulative Convertible Class C Preferred Stock transferable only on the books of the corporation by the holder hereof in person or by attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation this ____ day of ____________________, _________.
____________________________________
____________________________________
_____ Secretary ______ President
NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF LSB INDUSTRIES, INC. AND AN OPINION OF LSB INDUSTRIES, INC.'S COUNSEL, OR AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THIS COMMON STOCK MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT THE PRIOR WRITTEN CONSENT OF LSB INDUSTRIES, INC. AND AN OPINION OF LSB INDUSTRIES, INC.'S COUNSEL OR AN OPINION FROM COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION STATEMENT AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
FOR
*****
SHARES
of the
CAPITAL STOCK
designated as
Series D 6% Cumulative
Convertible Class C Preferred Stock
of
LSB Industries, Inc.
**** S P E C I M E N ****
DATED
For Value Received, ____________________ hereby sell, assign and transfer unto _____________________________ Shares of the Capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _____________________________ to transfer said Stock on the books of the within named Corporation with full power of substitution in the premises.
Dated ___________________________, XX_________.
In presence of _________________________________________
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this
"Agreement") is executed effective the 8th day of November, 2001, by PRIME FINANCIAL
CORPORATION, an Oklahoma corporation (the "Guarantor"), in favor of STILLWATER
NATIONAL BANK AND TRUST COMPANY, N.A. (the "Lender").
WHEREAS, the Lender has extended certain loans (the "Loans") to the parties identified below (the "Borrowers"), which Loans are 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 |
| Sylvia H. Golsen 1992 Trust |
37517 | 10-16-97 | $140,532 |
| Steven J. Golsen 1992 Trust |
37518 | 10-16-97 | $139,680 |
| Lori R. Rappaport #J-1 Trust |
37519 | 10-16-97 | $71,776 |
| Stacy L. Rappaport #J-1 Trust |
37520 | 10-16-97 | $71,776 |
| Amy G. Rappaport #J-1 Trust |
37521 | 10-16-97 | $73,908 |
| Adam Z. Golsen #J-1 Trust |
37522 | 10-16-97 | $71,776 |
| Michelle L. Golsen #J-1 Trust |
37523 | 10-16-97 | $71,776 |
| Barry H. Golsen 1992 Trust |
37524 | 10-16-97 | $149,680 |
| Linda F. Rappaport 1992 Trust |
37525 | 10-16-97 | $149,680 |
| Joshua B. Golsen #J-1 Trust |
37526 | 10-16-97 | $73,908 |
WHEREAS, the Guarantor has guaranteed payment of the Notes by previously executing and delivering to the Lender for each Loan a certain Guaranty Agreement dated April 21, 2000 (the "Prior Guaranties"); and
AMENDED AND RESTATED GUARANTY AGREEMENT
F:\Docs\1470\2011\HL02921.WPD
WHEREAS, this Agreement is executed by the Guarantor and delivered to the Lender to induce the Lender to make the Loans and in satisfaction of a material condition precedent to the Loans and to amend and restate the Prior Guaranties.
NOW, THEREFORE, in consideration of the Loans by the Lender to the Borrowers and the benefits to be derived by the Guarantor therefrom, it is agreed as follows:
1. Definition of Loan Documents. For purposes of this Agreement, "Loan Documents" will mean this Agreement, the Notes and all other instruments executed and delivered by the Borrowers, the Guarantor or any other person or entity in connection with the Loans, all instruments issued pursuant to the foregoing documents and all extensions, renewals, modifications and amendments thereof.
2. Guaranty. The Guarantor irrevocably and unconditionally guarantees to the Lender the payment of the obligations of the Borrowers contained in the Loan Documents including, without implied limitation, the payment of all principal, interest, attorneys' fees, expenses of collection and other sums now or hereafter owing by the Borrowers to the Lender thereunder. The obligation of the Guarantor hereunder is an absolute, unconditional, irrevocable and continuing guaranty of payment and performance and will not terminate until the Borrowers have paid in full all amounts owing to the Lender under the Loan Documents and have performed all of the Borrowers' obligations under the Loan Documents.
3. No Release. The Guarantor agrees that the Guarantor's liability hereunder will not be released, reduced, impaired or affected by the occurrence of any one or more of the following events: (a) the Lender obtaining collateral from the Borrowers or any other person to secure payment or performance under the Loan Documents; (b) the assumption of liability by any other person (whether as guarantor or otherwise) for payment or performance under the Loan Documents; (c) the release, surrender, exchange, loss, termination, waiver or other discharge of any collateral securing payment or performance under the Loan Documents; (d) the subordination, relinquishment or discharge of the Lender's rights relating to the Loan Documents or any collateral described therein; (e) the dissolution, insolvency, bankruptcy or reorganization of the Borrowers, any other guarantor of any obligation of the Borrowers to the Lender or any other person now or hereafter liable for payment or performance under the Loan Documents; (f) the increase, renewal, consolidation, extension, modification, rearrangement or amendment from time to time of the Loans or of the terms of any one or more of the Loan Documents; (g) the sale, encumbrance, transfer or other modification of the ownership of the Borrowers or the Borrowers' assets or the change in the financial condition or management of the Borrowers; (h) the invalidity, unenforceability or insufficiency of any one or more of the Loan Documents or any collateral securing payment or performance thereunder; or (i) the release of any person from any personal liability with respect to all or part of the guaranteed obligations.
4. Enforcement. The Lender will not be required to pursue the Lender's remedies against the Borrowers or any other guarantor of the Loans prior to exercising the Lender's remedies under this Agreement.
AMENDED AND RESTATED GUARANTY AGREEMENT
F:\Docs\1470\2011\HL02921.WPD
-2-
5. Waiver of Rights. The Guarantor waives diligence, presentment, protest, notice of dishonor, notice of acceptance of this Agreement and all other notices of any nature except as provided in the Loan Documents or this Agreement. Performance by the Guarantor hereunder will not entitle the Guarantor to any payment by the Borrowers or any other guarantor of the obligations of the Borrowers whether under the Loan Documents or otherwise by reason of any claim for contribution, indemnification, reimbursement, subrogation or otherwise, until such time as the Borrowers and any other guarantor of the obligations of the Borrowers under the Loan Documents have paid in full all amounts owing to the Lender and have performed all of the Borrowers' obligations under the Loan Documents. Notwithstanding anything herein to the contrary, the Guarantor hereby waives all rights of subrogation, contribution, reimbursement or indemnity against the Borrowers in connection with this Agreement (but not against any other party) until such time as the obligations of the Borrowers under the Notes or the Loan Documents have been paid in full.
6. Expenses of Collection. The Guarantor agrees that in any action brought to enforce this Agreement, the Guarantor will pay to the Lender the reasonable attorneys' fees, court costs and other litigation expenses incurred by the Lender.
7. Cumulative Remedies. On the occurrence of any event of default under the Loan Documents or this Agreement, the Lender will be entitled to selectively and successively enforce any one or more of the rights held by the Lender, and such action will not be deemed a waiver of any other right held by the Lender. Except as provided herein or in the Loan Documents, all of the remedies of the Lender under this Agreement and the Loan Documents are cumulative and not alternative.
8. Miscellaneous. This Agreement has been negotiated, executed and delivered in Oklahoma City, Oklahoma County, Oklahoma, and is intended to be construed in accordance with the laws of the State of Oklahoma. All actions relating to or arising under this Agreement, whether filed by the Lender or the Guarantor, will be instituted only in a state court sitting in Oklahoma County, Oklahoma, or a federal court sitting in Oklahoma City, Oklahoma. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect or application for any reason, such invalidity, illegality or unenforceability will not affect any other provisions herein contained and such other provisions will remain in full force and effect. This Agreement cannot be amended except by an agreement in writing signed by the Guarantor and the Lender.
9. Reinstatement. The obligations of the Guarantor under this Agreement will be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrowers in respect of all or any part of the guaranteed obligations is rescinded or must be otherwise restored by any holder of such guaranteed obligations, whether as a result of any proceedings in bankruptcy, reorganization or otherwise, and the Guarantor agrees that the Guarantor will indemnify the Lender on demand for all reasonable costs and expenses (including fees of counsel) incurred by the Lender in connection with such rescission or restoration.
10. Limitation of Liability. Notwithstanding anything to the contrary herein contained, the liability of the Guarantor hereunder will not exceed Three Hundred Fifty Thousand Dollars ($350,000.00).
AMENDED AND RESTATED GUARANTY AGREEMENT
F:\Docs\1470\2011\HL02921.WPD
-3-
11. Restatement. This Agreement amends, restates and replaces the Prior Guaranties in their entirety and the terms and provisions hereby will supersede the terms and provisions thereof.
IN WITNESS WHEREOF, the Guarantor and the Lender have executed this Agreement effective the date first above written.
PRIME FINANCIAL CORPORATION, an
Oklahoma
corporation
By /s/
Jack E. Golsen
Jack E. Golsen, President
(the "Guarantor")
STILLWATER NATIONAL BANK AND TRUST
COMPANY,
N.A.
By /s/
Sean
Fuller
Sean Fuller, Senior Vice President
(the "Lender")
AMENDED AND RESTATED GUARANTY AGREEMENT
F:\Docs\1470\2011\HL02921.WPD
-4-
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 Post Office Box 705, Oklahoma City, Oklahoma 73101 (the "Debtor"), and STILLWATER NATIONAL BANK AND TRUST COMPANY, N.A., having a notice address at 6305 Waterford Boulevard, Suite 205, Oklahoma City, Oklahoma 73118 (the "Secured Party").
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 |
| Sylvia H. Golsen 1992 Trust |
37517 | 10-16-97 | $140,532 |
| Steven J. Golsen 1992 Trust |
37518 | 10-16-97 | $139,680 |
| Lori R. Rappaport #J-1 Trust |
37519 | 10-16-97 | $71,776 |
| Stacy L. Rappaport #J-1 Trust |
37520 | 10-16-97 | $71,776 |
| Amy G. Rappaport #J-1 Trust |
37521 | 10-16-97 | $73,908 |
| Adam Z. Golsen #J-1 Trust |
37522 | 10-16-97 | $71,776 |
| Michelle L. Golsen #J-1 Trust |
37523 | 10-16-97 | $71,776 |
| Barry H. Golsen 1992 Trust |
37524 | 10-16-97 | $149,680 |
| Linda F. Rappaport 1992 Trust |
37525 | 10-16-97 | $149,680 |
| Joshua B. Golsen #J-1 Trust |
37526 | 10-16-97 | $73,908 |
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
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
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-2-
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.
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-3-
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.
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-4-
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
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-5-
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.
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-6-
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/ Jack E. Golsen
Jack E. Golsen, President
(the "Debtor")
STILLWATER NATIONAL BANK AND TRUST
COMPANY,
N.A.
By /s/
Sean
Fuller
Sean Fuller, Senior Vice President
(the "Secured Party")
SECURITY AGREEMENT
F:\DOCS\1470\2011\HL02923.WPD
-7-
| SECURITY AGREEMENT Stocks, Bonds and Possessory Collateral |
DATE OF AGREEMENT |
| DEBTOR NAME AND ADDRESS | PLEDGOR NAME AND ADDRESS | LENDER NAME AND ADDRESS |
| Golsen, Jack E.
16 South Pennsylvania Oklahoma City, OK 73103 |
Sylvia H. Golsen | Bank Of The West Clinton Branch P.O. Box 1207 Clinton, OK 73601 |
I. GRANT 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 Paragraphs 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 |
| 370000 share(s) of L.S.B. Industries common/preferred stock evidenced by certificate number SEE ATTACHED EXHIBIT. | |
|
| |
| (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 |
| (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. |
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 direct 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 page two hereof, the same being incorporated herein by reference.
| RECEIPT FOR COLLATERAL | SIGNATURE(S) |
|
By:________________________________ Ritchie Johnston, President |
/s/ Sylvia Golsen ____________________________ Sylvia H. Golsen _______________________________ _____________________________ |
Form 0406764 FCHAR12052000120235P (C) Copyright 7/97 American Bank Systems
BancFirst
| Principal $222,000.00 |
Loan Date 02-02-2001 |
Maturity 09-02-2005 |
Loan No. 4000040429 |
Call / Coll 20120 / 33 |
Account | Officer BKR |
Initials |
|
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | |||||||
| Borrower: | Jack E. Golsen (SSN: ###-##-####) Sylvia H. Golsen (SSN: ###-##-####) 16 South Pennsylvania Oklahoma City, OK 73107 |
Lender: | BancFirst OKC - MAIN AND BROADWAY 101 NORTH BROADWAY PO BOX 26788 OKLAHOMA CITY, OK 73126-0788 (405) 270-1000 | |
| Grantor: | SBL Corporation 16 South Pennsylvania Ave. Oklahoma City, OK 73107 |
THIS COMMERCIAL PLEDGE AGREEMENT dated February 2, 2001, is made and executed among SBL Corporation ("Grantor"); Jack E. Golsen and Sylvia H. Golsen ("Borrower"); and BancFirst ("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means all of Grantor's property (however owned if more than one), in the possession of Lender (or in the possession of a third party subject to the control of Lender), whether existing now or later and whether tangible or intangible in character, including without limitation each and all of the following:
188,500 Shares of LSB Industries, Inc. Stock, Cusip No. 502160 10 4, Certificate Number OKC 11688 in the
name of SBL Corporation
74,500 Shares of LSB Industries, Inc. Stock, Cusip No. 502160 10 4, Certificate Number OKC 11717, in the
name of SBL Corporation
In addition, the word "Collateral" includes all of Grantor's property (however owned), in the possession of Lender (or in the possession of a third party subject to the control of Lender), whether now or hereafter existing and whether tangible or intangible in character, including without limitation each of the following:
(A) All property to which Lender acquires title or documents of title.
(B) All property assigned to Lender.
(C) All promissory notes, bills of exchange, stock certificates, bonds, savings passbooks, time certificates
of
deposit, insurance policies, and all other instruments and evidence of an obligation.
(D) All records relating to any of the property described in this Collateral section, whether in the form of
a
writing, microfilm, microfiche, or electronic media.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower or any one or more of them, owed to Lender, whether of a like nature to the Note Indebtedness or not, whether arising from a loan or a purchased obligation, whether incurred for a consumer or a business purpose, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, absolute or contingent, liquidated or unliquidated and whether Borrower may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this agreement is executed at Borrower's request and not at the request of Lender; (B) Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender; (C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and (D) Lender has made no representation to Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower without first obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any modification of payment terms or other terms, or (D) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender's rights against Grantor or the Collateral.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor represents and warrants to Lender that:
Ownership. Grantor is the lawful owner of the Collateral free and clear of all security interests, liens,
encumbrances and claims of others except as disclosed to and accepted by Lender in writing prior to
execution
of this Agreement.
Right to Pledge. Grantor has the full right, power and authority to enter into this Agreement and to pledge
the Collateral.
Authority; Binding Effect. Grantor has the full right, power and authority to enter into this Agreement and
to grant a security interest in the Collateral to Lender. This Agreement is binding upon Grantor as well as
Grantor's successors and assigns, and is legally enforceable in accordance with its terms. The foregoing
representations and warranties, and all other representations and warranties contained in this Agreement
are
and shall be continuing in nature and shall remain in full force and effect until such time as this
Agreement is
terminated or cancelled as provided herein.
No Further Assignment. Grantor has not, and shall not, sell, assign, transfer, encumber or otherwise dispose
of any of Grantor's rights in the Collateral except as provided in this Agreement.
No Defaults. There are no defaults existing under the Collateral, and there are no offsets or counterclaims to
the same. Grantor will strictly and promptly perform each of the terms, conditions, covenants and agreements,
if any, contained in the Collateral which are to be performed by Grantor.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing
Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit
any term or condition of this Agreement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lender may hold the Collateral until all Indebtedness has been paid and satisfied. Thereafter Lender may deliver the Collateral to Grantor or to any other owner of the Colalteral. Lender shall have the following rights in addition to all other rights Lender may have by law:
Maintenance and Protection of Collateral. Lender may, but shall not be obligated to, take such steps as it
deems
necessary or desirable to protect, maintain, insure, store, or care for the Collateral, including paying of
any liens
or claims against the Collateral. This may include such things as hiring other people, such as
attorneys, appraisers
or other experts. Lender may charge Grantor for any cost incurred in so doing. When
applicable law provides
more than one method of perfection of Lender's security interest, Lender may choose
the method(s) to be used.
If the Collateral consists of stock, bonds or other investment property for which no
COMMERCIAL PLEDGE AGREEMENT
(Continued) Page 2
_______________________________________________________________________________________________
certificate has been issued, Grantor agrees, at Lender's request, either to request issuance of an appropriate
certificate or to give instructions on Lender's forms to the issuer, transfer agent, mutual fund company or
broker,
as the case may be, to record on its books or records Lender's security interest in the Collateral.
Income and Proceeds from the Collateral. Lender may receive all income and Proceeds and add it to the
Collateral. Grantor agrees to deliver to Lender immediately upon receipt, in the exact form received and
without
commingling with other property, all Income and Proceeds from the Collateral which may be received
by, paid,
or delivered to Grantor or for Grantor's account, whether as an addition to, in discharge of, in
substitution of,
or in exchange for any of the Collateral.
Application of Cash. At Lender's option, Lender may apply any cash, whether included in the Collateral or
received as Income and Proceeds or through liquidation, sale, or retirement, of the Collateral, to the satisfaction
of the Indebtedness of such portion thereof as Lender shall choose, whether or not matured.
Transactions with Others. Lender may (1) extend time for payment or other performance, (2) grant a renewal
or
change in terms or conditions, or (3) compromise, compound or release any obligation, with any one or
more
Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems advisable, without
obtaining the
prior written consent of Grantor, and no such act or failure to act shall affect Lender's rights
against Grantor
or the Collateral.
All Collateral Secures Indebtedness. All Collateral shall be security for the Indebtedness, whether the
Collateral is located at one or more offices or branches of Lender. This will be the case whether or not the
office or branch where Grantor obtained Grantor's loan knows about the Collateral or relies upon the Collateral
as security. In the event Grantor comes into the possession of any Collateral, Grantor will deliver it
immediately
to Lender.
Collection of Collateral. Lender at Lender's option may, but need not, collect the Income and Proceeds
directly
from the Obligors. Grantor authorizes and directs the Obligors, if Lender decides to collect the Income
and
Proceeds, to pay and deliver to Lender all Income and Proceeds from the Collateral and to accept Lender's
receipt
for the payments.
Power of Attorney. Grantor irrevocably appoints Lender as Grantor's attorney-in-fact, with full power of
substitution, (a) to demand, collect, receive, receipt for, sue and recover all Income and Proceeds, and other
sums of money and other property which may
now or hereafter become due, owing or payable from the
Obligors in accordance with the terms of the Collateral; (b) to execute, sign and endorse any and all
instruments,
receipts, checks, drafts, and warrants issued in payment for the Collateral; (c) to settle or
compromise any and
all claims arising under the Collateral, and in the place and stead of Grantor, execute and
deliver Grantor's
release and acquittance for Grantor; 9d) to file any claim or claims or to take any action or
institute or take part
in any proceedings, either in Lender's own name or in the name of Grantor, or otherwise,
which in the discretion
of Lender may seem to be necessary or advisable; and (e) to execute in Grantor's name
and to deliver to the
Obligors on Grantor's behalf, at the time and in the manner specified by the Collateral,
any necessary
instruments or documents.
Perfection of Security Interest. Upon Lender's request, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral. When applicable law provides more than one method of
perfection of Lender's security interest, Lender may choose the method(s) to be used. Upon Lender's request,
Grantor will sign and deliver any writings necessary to perfect Lender's security interest. If any of the
Collateral
consists of securities for which no certificate has been issued, Grantor agrees, at Lender's option,
either to
request issuance of an appropriate certificate or to execute appropriate instructions on Lender's forms
instructing the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its
books or records, by book-entry or otherwise, Lender's security interest in the Collateral. Grantor hereby
appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary
to perfect or to continue the security interest granted in this Agreement.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such encumbrances incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note or at the highest rate authorized by law, from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable Insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. If Lender is required by law to give Grantor notice before or after Lender makes an expenditure, Grantor agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care in the physical preservation and custody of the Collateral in Lender's possession, but shall have no other obligation to protect the Collateral or its value. In particular, but without limitation, Lender shall have no responsibility for (A) any depreciation in value of the Collateral or for the collection or protection of any Income and Proceeds from the Collateral, (B) preservation of rights against parties to the Collateral or against third persons, (C) ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to any of the Collateral, or (D) Informing Grantor about any of the above, whether or not Lender has or is deemed to have knowledge of such matters. Except as provided above, Lender shall have no liability for depreciation or deterioration of the Collateral.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Indebtedness.
Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation,
Default in Favor of Third Parties. Should Borrower or any Grantor default under any loan, extension of
credit,
security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor
or person
that may materially affect any of Borrower's property or Borrower's or any Grantor's ability to repay
the
Indebtedness or perform their respective obligations under this Agreement or any of the Related
Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or
Grantor
or on Borrower's or Grantor's behalf under this Agreement, the Note, or the Related Documents is false
or
misleading in any material respect, either now or at the time made or furnished or becomes false or
misleading at
any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and
effect
(including failure of any collateral document to create a valid and perfected security interest or lien) at
any time
and for any reason.
Death or Insolvency. The death of Borrower or Grantor or the dissolution or termination of Borrower's or
Grantor's existence as a going business, the insolvency of Borrower or Grantor, the appointment of a receiver
for
any part of Borrower's or Grantor's property, any assignment for the benefit of creditors, any type of
creditor
workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or
against
Borrower or Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or Grantor
or
by any governmental agency against any collateral securing the Indebtedness. This includes a
garnishment
of any of Borrower's or Grantor's accounts, including deposit accounts, with Lender.
However, this Event of
Default shall not apply if there is a good faith dispute by Borrower or Grantor
as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower or
Grantor gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve
or bond for the dispute.
Insufficient Market Value of Securities. The Collateral to loan percentage falls below 200.00%; as a result
of
the deterioration of the market value of the Collateral , Grantor does not, by the close of business on the next
business day after Grantor has received notice from Lender of the deterioration, either (1) reduce the amount
of the Indebtedness in this loan as required by Lender or (2) pledge or grant an additional security interest to
increase the value of the Collateral as required by Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect to guarantor, endorser, surety,
or
accommodation party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party
dies
or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the
Indebtedness.
Adverse Change. A material adverse change occurs in Borrower's or Grantor's financial condition, or Lender
COMMERCIAL PLEDGE AGREEMENT
(Continued) Page 3
_______________________________________________________________________________________________
believes the prospect of payment or performance of the Indebtedness is impaired.
Adverse Change. A material adverse change occurs in Borrower's or Grantor's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment or failure to satisfy Lender's requirement in
the
Insufficient Market Value of Securities section is curable and if Grantor has not been given a notice of a
breach
of the same provision of this Agreement within the preceding twelve (12) months, it may be cured (and
no event
of default will have occurred) if Grantor, after receiving written notice from Lender demanding cure
of such
default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15)
days,
immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the
default
and thereafter continues and completes all reasonable and necessary steps sufficient to produce
compliance as
soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Declare all Indebtedness, including any prepayment penalty which Borrower would
be
required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.
Collect the Collateral. Collect any of the Collateral and, at Lender's option and to the extent permitted by
applicable law, retain possession of the Collateral while suing on the Indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit or in parcels, at one or more public or
private sales. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender shall give or mail to Grantor, or any of them, notice at least
ten (10) days in advance of the time and place of any public sale, or of the date after which any private sale
may be made. Grantor agrees that any requirement of reasonable notice is satisfied if Lender mails notice by
ordinary mail addressed to Grantor, or any of them, at the last address Grantor has given Lender in writing.
If a
public sale is held, there shall be sufficient compliance with all requirements of notice to the public by a
single
publication in any newspaper of general circulation in the county where the Collateral is located, setting
forth
the time and place of sale and a brief description of the property to be sold. Lender may be a purchaser
at any
public sale.
Sell Securities. Sell any securities included in the Collateral in a manner consistent with applicable federal
and state securities laws. If, because of restrictions under such laws, Lender is unable, or believes Lender is
unable, to sell the securities in an open market transaction, Grantor agrees that Lender will have no obligation
to delay sale until the securities can be registered. Then Lender may make a private sale to one or more
persons
or to a restricted group of persons, even though such sale may result in a price that is less favorable
than
might be obtained in an open market transaction. Such a sale will be considered commercially reasonable.
If
any securities held as Collateral are "restricted securities" as defined in the Rules of the Securities and
Exchange
Commission (such as Regulation D or Rule 144) or the rules of state securities departments under
state "Blue Sky"
laws, or if Grantor or any other owner of the Collateral is an affiliate of the issuer of the
securities, Grantor agrees
that neither Grantor, nor any member of Grantor's family, nor any other person
signing this Agreement will sell
or dispose of any securities of such issuer without obtaining Lender's prior
written consent.
Rights and Remedies with Respect to Investment Property, Financial Assets and Related Collateral.
In
addition to other rights and remedies granted under this Agreement and under applicable law, Lender
may
exercise any or all of the following rights and remedies: (1) register with any issuer or broker or
other securities
Intermediary any of the Collateral consisting of investment property or financial assets
(collectively herein,
"Investment property") in Lender's sole name or in the name of Lender's broker,
agent or nominee; ()2) cause
any issuer, broker or other securities intermediary to deliver to Lender
any of the Collateral consisting of
securities, or investment property capable of being delivered;
(3) enter into a control agreement or power of
attorney with any issuer or securities intermediary with
respect to any Collateral consisting of investment
property, on such terms as Lender may deem
appropriate, in its sole discretion, including, without limitation,
an agreement granting to Lender any
of the rights provided hereunder without further notice to or consent by
Grantor; (4) execute any such
control agreement on Grantor's behalf and in Grantor's name, and hereby
irrevocably appoints Lender
as agent and attorney-in-fact, coupled with an interest, for the purpose of
executing such control
agreement on Grantor's behalf; (5) exercise any and all rights of Lender under any such
control
agreement or power of attorney; (6) exercise any voting, conversion, registration, purchase, option,
or
other rights with respect to any Collateral; (7) collect, with or without legal action, and issue receipts
concerning any notes, checks, drafts, remittances or distributions that are paid or payable with respect
to any
Collateral consisting of investment property. Any control agreement entered with respect to
any investment
property shall contain the following provisions, at Lender's discretion. Lender shall be
authorized to instruct
the issuer, broker or other securities intermediary to take or to refrain from taking
such actions with respect
to the investment property as Lender may instruct, without further notice to
or consent by Grantor. Such
actions may include without limitation the issuance of entitlement orders,
account instructions, general trading
or buy or sell orders, transfer and redemption orders, and stop
loss orders. Lender shall be further entitled to
instruct the issuer, broker or securities intermediary to
sell or to liquidate any investment property, or to pay
the cash surrender or account termination value
with respect to any and all investment property, and to deliver
all such payments and liquidation
proceeds to Lender. Any such control agreement shall contain such
authorizations as are necessary
to place Lender in "control" of such investment collateral, as contemplated
under the provisions of
the Uniform Commercial Code, and shall fully authorize Lender to issue "entitlement
orders" concerning
the transfer, redemption, liquidation or disposition of investment collateral, in conformance
with the
provisions of the Uniform Commercial Code.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the Collateral.
Transfer Title. Effect transfer of title upon sale of all or part of the Collateral. For this purpose, Grantor
irrevocably appoints Lender as Grantor's attorney-in-fact to execute endorsements, assignments and
instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable.
Other Rights and Remedies. Have and exercise any or all of the rights and remedies of a secured creditor
under
the provisions of the Uniform Commercial Code, at law, in equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the Collateral, or which is received from the
collection or sale of the Collateral, to reimbursement of any expenses, including any costs for registration
of
securities, commissions incurred in connection with a sale, attorneys' fees and court costs, whether or
not there
is a lawsuit and including any fees on appeal, incurred by Lender in connection with the collection
and sale
of such Collateral and to the payment of the Indebtedness of Borrower to Lender, with any excess
funds to be
paid to Grantor as the interests of Grantor may appear. Borrower agrees, to the extent permitted
by law, to pay
any deficiency after application of the proceeds of the Collateral to the Indebtedness.
Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies,
whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative
and may be
exercised singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude
pursuit of any other remedy, and an election to make expenditures or to take action to perform an
obligation
of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right
to declare
a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement.
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding
and agreement of the parties as to the matters set forth in this Agreement. All prior and contemporaneous
representations and discussions concerning such matters either are included in this document or do not
constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this
Agreement,
no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Grantor's
obligations
under this Agreement. No alteration of or amendment to this Agreement shall be effective unless
given in
writing and signed by the party or parties sought to be charged or bound by the Alteration or
amendment.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including
Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lenders' attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional
fees
as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be
used to interpret or define the provisions of this Agreement.
Governing Law. This Agreement will be governed by, construed and enforced in accordance with
federal
law and the laws of the State of Oklahoma. This Agreement has been accepted by Lender in the
State of
Oklahoma.
Joint and Several Liability. All obligations of Borrower and Grantor under this Agreement shall be joint and
COMMERCIAL PLEDGE AGREEMENT
(Continued) &nbs
p;
Page 4
_______________________________________________________________________________________________
several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall
mean each and every Borrower. This means that each Borrower and Grantor signing below is responsible for
all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited
liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the
officers, directors, partners, members, or other agents acting or purporting to act on the entity's behalf, and
any
obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed
under
this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless
such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this
Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance
with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement,
the granting of such consent by Lender in any instance shall not constitute continuing consent to
subsequent
instances where such consent is required and in all cases such consent may be
granted or
withheld in the sole
discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to give given under this Agreement
shall be given in writing, and shall be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail
postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may
change
its address for notices under this Agreement by giving formal written notice to the other parties,
specifying that
the purpose of the notice is to change the party's address. For notice purposes, Grantor
agrees to keep Lender
informed at all times of Grantor's current address. To the extent permitted by
applicable law, if there is more
than one Grantor, any notice given by Lender to any Grantor is deemed
to be notice given to all Grantors.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal,
invalid,
or unenforceable as to any circumstance, that finding shall not make the offending provision
illegal, invalid,
or unenforceable as to any other circumstance. If feasible, the offending provision shall
be considered
modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required
by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not
affect the legality, validity or enforceability
of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement or transfer of Grantor's
interest,
this Agreement shall be binding upon and inure to the benefit of the parties, their successors
and assigns. If
ownership of the Collateral becomes vested in a person other than Grantor, Lender,
without notice to Grantor,
may deal with Grantor's successors with reference to this Agreement and the
Indebtedness by way of
forbearance or extension without releasing Grantor from the obligations of
this Agreement or liability under
the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such term in the Uniform Commercial Code.
Agreement. The word "Agreement" means this Commercial Pledge Agreement, as this Commercial Pledge
Agreement may be amended or modified from time to time, together with all exhibits and schedules attached
to this Commercial Pledge Agreement from time to time.
Borrower. The word "Borrower" means Jack E. Golsen and Sylvia H. Golsen, and all other persons and
entities signing the Notice in whatever capacity.
Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all of the Collateral
as described in the Collateral Description section of this Agreement.
Default. The word "Default" means the Default set forth in this Agreement in the section titled "Default
Event of Default. The words "Event of Default" mean any of the events of default set forth in this
Agreement in the default section of this Agreement.
Grantor. The word "Grantor" means SBL Corporation.
Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation
party to Lender, including without limitation a guaranty of all or part of the Note.
Income and Proceeds. The words "Income and Proceeds" mean all present and future income, proceeds,
earnings, increases, and substitutions from or for the Collateral of every kind and nature, including without
limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock
dividends, stock splits, stock rights, regulatory dividends, subscriptions, monies, claims for money due
and to
become due, proceeds of any insurance on the Collateral, shares of stock of different par value or
no par value
issued in substitution or exchange for shares included in the Collateral, and all other property
Grantor is
entitled to receive on account of such Collateral, including accounts, documents, instruments,
chattel paper,
and general intangibles.
Indebtedness. The word "Indebtedness" means the Indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other Indebtedness and costs and
expenses for
which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means BancFirst, its successors and assigns.
Note. The word "Note" means the Note executed by Borrower in the principal amount of $222,000.00 dated
February 2, 2001, together with all renewals of, extensions of, modifications of, refinancings of,
consolidations
of, and substitutions for the note or credit agreement.
Obligor. The word "Obligor" means without limitation any and all persons obligated to pay money or to
perform some other act under the Collateral.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust,
security
deeds, collateral mortgages, and all other instruments, agreements and documents, whether now
or hereafter
existing, executed in connection with the Indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 2, 2001.
| GRANTOR:
SBL CORPORATION
|
|
|
BORROWER: X /s/ Jack E. Golsen Jack E. Golsen, Individually |
X /s/ Sylvia H. Golsen Sylvia H. Golsen, Individually |
| Principal $158,208.88 |
Loan Date 08-27-2001 |
Maturity 08-27-2002 |
Loan No. 83827 |
Call / Coll |
Account 013205213 |
Officer JAS |
Initials |
|
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | |||||||
| Borrower: | Jack E. Golsen (SSN: ###-##-####) 16 South Pennsylvania Oklahoma City, OK 73107 |
Lender: | THE BANK OF UNION THE BANK OF UNION, EL RENO 2000 S. COUNTRY CLUB RD. P.O. BOX 1010 EL RENO, OK 73036 |
THIS COMMERCIAL SECURITY AGREEMENT dated August 27, 2001, is made and executed between JACK E. GOLSEN ("Grantor") and THE BANK OF UNION ("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing now or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:
1,523,933 TOTAL SHARES OF LSB INDUSTRIES, INC. STOCK (533,333 SHARES OF PREFERRED
"B" AND 990,600 SHARES OF COMMON) PLEDGED AS COLLATERAL ON JACK E. GOLSEN,
GOLSEN PETROLEUM CORPORATION AND SBL CORPORATION NOTES;
CASH VALUE LIFE
INSURANCE; LOAN AGREEMENT
In addition, the word "Collateral" also includes all of the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:
(A) All accessions, attachments, accessories, replacements and additions to any of the collateral described
herein, whether added now or later.
(B) All proceeds and produce of any of the property described in this Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising
out
of a sale, lease, or other disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of
any
of the property described in this Collateral section, and sums due from a third party who has damaged or
destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in this Collateral section, whether in the
form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right,
title, and interest in and to all computer software required tu utilize, create, maintain, and process any such
records or data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will not have, a nonpurchase money security interest in household goods, to the extent such a security interest would be prohibited by applicable law. In addition, if because of the type of any Property, Lender is required to give a notice of the right to cancel under Truth in Lending for the Indebtedness, then Lender will not have a security interest in such Collateral unless and until such a notice is given.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:
Perfection of Security Interest. Grantor agrees to execute financing statements and to take whatever other
actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting
the
Collateral, and Grantor will note Lender's interest upon any and all chattel paper if not delivered to
Lender for
possession by Lender.
Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or
such
other addresses as Lender may designate from time to time) prior to any (1) change in Grantor's
name; (2)
change in Grantor's assumed business name(s); (3) change in the authorized signer(s); (4)
change in Grantor's
principal office address; (5) change in Grantor's principal residence; (6) conversion
of Grantor to a new or
different type of business entity; or (7) change in any other aspect of Grantor that
directly or indirectly relates
to any agreements between Grantor and Lender. No change in Grantor's name
or principal residence will take
effect until after Lender has received notice.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing
Grantor or to which Grantor is a party.
Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general
intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and
manner of preparation and execution, and all persons appearing to be obligated on the Collateral have
authority
and capacity to contract and are in fact obligated as they appear to be on the Collateral. There
shall be no
setoffs or counterclaims against any of the Collateral, and no agreement shall have been made
under which any
deductions or discounts maybe claimed concerning the Collateral except those disclosed
to Lender in writing.
Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the
Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon
Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties
and
Collateral locations relating to Grantor's operations, including without limitation, the following: (1) all
real
property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage
facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of Grantor's business, Grantor shall not remove the
Collateral from its existing location without Lender's prior written consent. Grantor shall, whenever requested,
advise Lender of the exact location of the Collateral.
Transactions Involving Collateral. Except for Inventory sold or accounts collected in the ordinary course
of
Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. Grantor shall not pledge, mortgage, encumber or otherwise
permit
the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security
interest
provided for in this Agreement, without the prior written consent of Lender. This includes security
interests
even if junior in right to the security interests granted under this Agreement. Unless waived by
Lender, all
proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for
Lender and shall
not be commingled with any other funds; provided, however, this requirement shall not
constitute consent by
Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver
any such proceeds
to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral,
free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than those which reflect the security interest
created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender's rights
in the Collateral against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain,
the
Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor
further
agrees to pay when due all claims for work done on, or services rendered or material furnished in
connection
with the Collateral so that no lien or encumbrance may ever attach to or be filed against the
Collateral.
Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at
all
reasonable times to examine and inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the
Collateral,
its use or operation, upon this Agreement, upon any promissory note or notes evidencing the
Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such payment or may
elect to contest
any lien if Grantor is in good faith conducting an appropriate proceeding to contest the
obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion.
If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit
with Lender cash,
a sufficient corporate surety bond or other security satisfactory to Lender in an amount
COMMERCIAL SECURITY AGREEMENT
Loan No. 83827 (Continued) Page 2
_______________________________________________________________________________________________
adequate to provide for the discharge of the lien plus any interest, costs, attorneys' fees or other charges that
could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and
Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall
name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor
further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other
charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect
to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation
to pay and so long as Lender's interest in the Collateral is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances,
rules
and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as
Lender's interest in the
Collateral, in Lender's opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will
be
so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws
or
for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release
of
any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any
future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or
other costs under any Environmental Laws, and (2) agrees to indemnity and hold harmless Lender against any
and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to
indemnity shall survive the payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including
without
limitation fire, theft and liability coverage together with such other insurance as Lender may require
with
respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and
issued
by a company or companies reasonably acceptable to lender. Grantor, upon request of Lender, will
deliver to
Lender from time to time the policies or certificates of insurance in form satisfactory to Lender,
including
stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior
written
notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a
notice.
Each insurance policy also shall include an endorsement providing that coverage in favor of Lender
will not
be impaired in any way by any act, omission or default of Grantor or any other person. In connection
with all
policies covering assets in which Lender holds or is offered a security interest, Grantor will provide
Lender
with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to
obtain or
maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to)
obtain
such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance,"
which will cover only Lender's interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the
Collateral. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty.
All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by
Lender
as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed
Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds
for the
reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the
Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall
pay the balance
to Grantor. Any proceeds which have not been disbursed within six (6) months after their
receipt and which
Grantor has not committed to the repair or restoration of the Collateral shall be used to
prepay the
Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance
premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender
to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to
the
insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are
insufficient,
Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by
Lender as a
general deposit and shall constitute a non-interest-bearing account which Lender may satisfy
by payment of
the insurance premiums required to be paid by Grantor as they become due. Lender does not
hold the reserve
funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the
insurance premiums
required to be paid by Grantor. The responsibility for the payment of premiums shall
remain Grantor's sole
responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy
of insurance showing such information as Lender may reasonably request including the following: (1) the
name
of the Insurer; (2) the risks incurred; (3) the amount of the policy; (4) the property insured; (5) the then
current
value on the basis of which insurance has been obtained and the manner of determining that value;
and (6) the
expiration date of the policy. In addition, Grantor shall upon request by Lender (however not
more often than
annually) have an independent appraiser satisfactory to Lender determine, as applicable,
the cash value or
replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the collateral by Lender is required by law to perfect lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect or maintain any security interest given to secure the Indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such encumbrances incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note or at the highest rate authorized by law, from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable Insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. If Lender is required by law to give Grantor notice before or after Lender makes an expenditure, Grantor agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Other Defaults. Grantor
fails to comply with or to perform any other term, obligation, covenant or
condition
contained in this Agreement or
in any of the Related Documents or to comply with or to perform any term,
obligation, covenant or
condition contained in any other agreement between Lender and Grantor.
False Statements. Any warranty, representation or statement made or furnished to Lender by
Grantor or
on Grantor's behalf under this Agreement, the Note, or the Related Documents is false
or misleading in
any material respect, either now or at the time made or furnished or becomes false or misleading at any
time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and
effect (including failure of any collateral document to create a valid and perfected security interest or lien) at
any time and for any reason.
Death or Insolvency. The death of
Grantor or the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or
against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any creditor of
Grantor or by any
governmental agency against any collateral securing the Indebtedness. This includes a garnishment
of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by
Grantor as to the validity or reasonableness
of the claim which is the basis of the creditor or forfeiture proceeding and if
Grantor gives Lender
written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to guarantor, endorser, surety,
or accommodation party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party
dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the
Indebtedness.
Adverse Change. A material adverse change occurs in
Grantor's financial condition, or Lender believes
the prospect of payment or performance of the Indebtedness is impaired.
COMMERCIAL SECURITY AGREEMENT
Loan No. 83827 (Continued) Page 3
_______________________________________________________________________________________________
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been
given a notice of a breach of the same provision of this Agreement within the preceding twelve (12)
months, it may be cured (and
no event of default will have occurred) if Grantor, after receiving written
notice from Lender demanding cure
of such default: (1) cures the default within fifteen (15) days; or
(2) if the cure requires more than fifteen (15)
days, immediately initiates steps which Lender deems
in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce
compliance as soon as
reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Oklahoma Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender
may declare the entire Indebtedness, including any prepayment penalty
which Grantor would be required to pay, immediately due and payable, without notice of any kind to
Grantor.
Assemble Collateral. Lender
may require Grantor to deliver to Lender all or any portion of the Collateral
and any and all
certificates of title and other documents relating to the Collateral.
Lender may require
Grantor to assemble
the Collateral and make it available to Lender at a place to be designated by
Lender.
Lender also shall
have full power to enter upon the property of Grantor to take possession of
and
remove the
Collateral. If the Collateral contains other goods not covered by this
Agreement at the time
of repossession,
Grantor agrees Lender may take such other goods, provided that Lender makes
reasonable efforts
to return them to Grantor after repossession.
Sell the Collateral. Lender
shall have full power to sell, lease, transfer, or otherwise dispose of the
Collateral. Unless the Collateral
in whole or in part is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Lender
will give Grantor 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. Notwithstanding
any other provision of this Agreement, any require-
ment of notice for
this purpose shall be met if notice is mailed, postage prepaid, to the address
of
Grantor provided for
in this Agreement at least ten (10) days before sale or other disposition or
action. Lender
shall be entitled to, and Grantor shall be liable for, all reasonable costs
and
expenditures
incurred in realizing on Lender's security interest, including without
limitation, all
court costs, fees
for sale, selling costs and reasonable attorneys' fees as set forth in the Note
or
in this
Agreement. All such costs shall be secured by the security interest in the
Collateral
covered by this
Agreement.
Appoint Receiver. In any action by Lender for the foreclosure of this Agreement, whether by judicial
foreclosure or power of sale, Lender shall be entitled to the appointment of a receiver upon any failure of
Grantor to comply with any term, obligation, covenant, or condition contained in this Agreement, the Note,
or any Related Documents.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments,
rents, income and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and
revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the
Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on
the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these
purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed
to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts,
money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of
any
Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to
make
payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment
against
Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all
amounts
received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a
deficiency
even if the transaction described in this subsection is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender
s hall have all the rights and remedies of a secured creditor
under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In
addition, Lender
shall have and may exercise any or all other rights and remedies it may
have
available at law, in
equity, or otherwise.
Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies,
whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare
a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement.
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding
and agreement of the parties as to the matters set forth in this Agreement. All prior and contemporaneous
representations and discussions concerning such matters either are included in this document or do not
constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this Agreement,
no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Grantor's obligations
under this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or bound by the
alteration or amendment.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including
Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lenders' attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional
fees
as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be
used to interpret or define the provisions of this Agreement.
Governing Law. This Agreement will be governed by, construed and enforced in accordance with
federal law
and the laws of the State of Oklahoma. This Agreement has been accepted by Lender in the
State of Oklahoma.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless
such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this
Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance
with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement,
the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole
discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to
be given under this Agreement
shall be given in writing, and shall be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail
postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may
change
its address for notices under this Agreement by giving formal written notice to the other parties,
specifying that
the purpose of the notice is to change the party's address. For notice purposes, Grantor
agrees to keep Lender
informed at all times of Grantor's current address. To the extent permitted by
applicable law, if there is more
than one Grantor, any notice given by Lender to any Grantor is deemed to
be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the
purpose
of executing any documents necessary to perfect, amend, or to continue the security interest
granted in this
Agreement or to demand termination of filings of other secured parties. Lender may at any
time, and without
further authorization from Grantor, file a carbon, photographic or other reproduction
of any financing
statement or of this Agreement for use as a financing statement. Grantor will reimburse
Lender for all
expenses for the perfection and the continuation of the perfection of Lender's security
interest in the Collateral.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal,
invalid,
or unenforceable as to any circumstance, that finding shall not make the offending provision illegal,
invalid,
or unenforceable as to any other circumstance. If feasible, the offending provision shall be
considered
modified so that it becomes legal, valid and enforceable. If the offending provision cannot be
so modified, it
shall be considered deleted from this Agreement. Unless otherwise required by law, the
illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect the legality,
validity or enforceability
of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement or transfer of Grantor's interest,
this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns.
If
ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to
COMMERCIAL SECURITY AGREEMENT
Loan No. 83827 (Continued) Page 4
_______________________________________________________________________________________________
Grantor,
may deal with Grantor's successors with reference to this Agreement and the Indebtedness by
way of
forbearance or extension without releasing Grantor from the obligations of this Agreement or liability
under
the Indebtedness.
Survival of Representations and Warranties. All representations, warranties, and agreements made by
Grantor
in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in
nature,
and shall remain in full force and effect until such time as Grantor's Indebtedness shall be paid in full.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action,
proceeding, or counterclaim brought by any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such term in the Uniform Commercial Code.
Agreement. The word "Agreement" means this Commercial
Security Agreement, as this Commercial Security
Agreement may be amended or modified from time to time, together with all exhibits and schedules attached
to this Commercial
Security Agreement from time to time.
Borrower. The word "Borrower" means JACK E. GOLSEN, and all other persons and entities signing the
Notice in whatever capacity.
Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all of the Collateral
as described in the Collateral Description section of this Agreement.
Default. The word "Default" means the Default set forth in this Agreement in the section titled "Default".
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statues,
regulations and ordinances relating to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as
amended,
42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986,
Pub. L. No. 99-4999 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable
state or
federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this
Agreement
in the default section of this Agreement.
Grantor. The word "Grantor" means JACK E. GOLSEN.
Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation
party to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity,
concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated, stored, disposed of, generated,
manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very
broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste
as
defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes,
without
limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the Indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other Indebtedness and costs and expenses
for
which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means THE BANK OF UNION, its successors and assigns.
Note. The word "Note" means the Note executed by Grantor in the principal amount of $158,208.88 dated
August 27, 2001, together with all renewals of, extensions of, modifications of, refinancings of,
consolidations
of, and substitutions for the note or credit agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter
existing, executed in connection with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AUGUST 27, 2001.
| GRANTOR:
X /s/ Jack E. Golsen Jack E. Golsen, Individually |
|
|
LENDER: THE BANK OF UNION X Authorized Signer |