CUSIP NO. 5021600-10-4
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13D/A
Under
the Securities Exchange Act of 1934
(Amendment
No. 32)
LSB
INDUSTRIES, INC.
(Name of Issuer)
(Name of Issuer)
COMMON
STOCK, PAR VALUE $.10
(Title
of
Class of Securities)
5021600-10-4
(CUSIP Number)
(CUSIP Number)
Jack
E. Golsen
16
South Pennsylvania
Oklahoma
City, Oklahoma 73107
(405)
235-4546
(Name,
Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December
5, 2006
(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 ' '240.13d-1(e),
240.13d-1(f), or 240.13d-1(g) Rule 13d-1(b)(3) or (4), check the following
box.
[ ]
Note:
Schedules filed in paper format shall include a signed original and five
copies
of the schedule, including all exhibits. '240.13d-7
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 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).
Page
1
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S. Identification,
No.
of above Persons (entities only)
|
Jack
E. Golsen
|
|
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a) [
]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
Not
applicable
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
USA
|
|
|
|
(7)
|
Sole
Voting Power
|
432,362
|
|
|
Number
of Shares
|
(8) | Shared Voting Power |
3,436,781
|
|
|
Beneficially
|
|
|
|
|
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
432,362
|
|
|
Reporting
Person
|
||||
|
With:
|
(10)
|
Shared
Dispositive Power
|
3,436,781
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
3,869,143
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
23.18%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
IN
|
Page
2
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S.
Identification
No.
of above Persons (entities only)
|
Sylvia
H. Golsen
|
|
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a)
[ ]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
Not
applicable
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or
2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
USA
|
|
|
(7)
|
Sole
Voting Power
|
-
|
||
|
Number
of Shares
|
(8) | Shared Voting Power |
3,436,781
|
|
|
Beneficially
|
|
|
|
|
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
-
|
|
|
Reporting
Person
|
||||
|
With:
|
(10)
|
Shared
Dispositive Power
|
3,436,781
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
3,436,781
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
20.59%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
IN
|
Page
3 of
23 Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S. Identification
No.
of above Persons (entities only)
|
SBL
Corporation
|
|
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a)
[ ]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
Not
applicable
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or
2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
Oklahoma
|
|
|
(7)
|
Sole
Voting Power
|
-
|
||
|
Number
of Shares
|
(8)
|
Shared
Voting Power
|
2,598,034
|
|
|
Beneficially
|
||||
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
-
|
|
|
Reporting
Person
|
||||
|
With:
|
(10)
|
Shared
Dispositive Power
|
2,598,034
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
2,598,034
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares
(See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
15.56%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
CO
|
Page
4
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S. Identification
No.
of above Persons (entities only)
|
Golsen
Petroleum Corporation
|
|
|
(2)
|
Check
the Appropriate Box if a
Member of a Group (See Instructions)
|
(a)
[ ]
(b) [X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
Not
applicable
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
Oklahoma
|
|
|
(7)
|
Sole
Voting Power
|
-
|
||
|
|
||||
|
Number
of Shares
|
(8)
|
Shared
Voting Power
|
396,758
|
|
|
Beneficially
|
||||
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
-
|
|
|
Reporting
Person
|
|
|||
|
With:
|
(10)
|
Shared
Dispositive Power
|
396,758
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
396,758
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares
(See
Instructions)
|
[
]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
2.38%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
CO
|
Page
5 of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S.
Identification
No.
of above Persons (entities only)
|
Barry
H. Golsen
|
|
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a)
[ ]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
PF
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or
2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
USA
|
|
|
(7)
|
Sole
Voting Power
|
377,889
|
||
|
|
||||
|
Number
of Shares
|
(8)
|
Shared
Voting Power
|
2,791,040
|
|
| Beneficially | ||||
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
377,889
|
|
|
Reporting
Person
|
|
|||
|
With:
|
(10)
|
Shared
Dispositive Power
|
2,791,040
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
3,168,929
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
18.98%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
IN
|
Page
6
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S. Identification
No.
of above Persons (entities only)
|
Steven J. Golsen | |
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a)
[ ]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
PF
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or
2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
USA
|
|
|
(7)
|
Sole
Voting Power
|
295,165
|
||
|
|
||||
|
Number
of Shares
|
(8)
|
Shared
Voting Power
|
2,663,488
|
|
|
Beneficially
|
||||
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
295,165
|
|
|
Reporting
Person
|
|
|||
|
With:
|
(10)
|
Shared
Dispositive Power
|
2,663,488
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
2,958,653
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
17.72%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
IN
|
Page
7
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(1)
|
Names
of Reporting Persons, I.R.S.
Identification
No.
of above Persons (entities only)
|
Linda Golsen Rappaport | |
|
(2)
|
Check
the Appropriate Box if a Member of a Group (See
Instructions)
|
(a)
[ ]
(b)
[X]
|
|
|
(3)
|
SEC
Use Only
|
||
|
(4)
|
Source
of Funds (See Instructions)
|
Not
Applicable
|
|
|
(5)
|
Check
if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
|
||
|
(6)
|
Citizenship
or Place of Organization
|
USA
|
|
|
(7)
|
Sole
Voting Power
|
82,552
|
||
|
|
||||
|
Number
of Shares
|
(8)
|
Shared
Voting Power
|
2,725,586
|
|
|
Beneficially
|
||||
|
Owned
by Each
|
(9)
|
Sole
Dispositive Power
|
82,552
|
|
|
Reporting
Person
|
|
|||
|
With:
|
(10)
|
Shared
Dispositive Power
|
2,725,586
|
|
|
(11)
|
Aggregate
Amount Beneficially Owned by Each Reporting Person
|
2,808,138
|
|
|
(12)
|
Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
|
[X]
|
|
|
(13)
|
Percent
of Class Represented by Amount in Row (11)
|
16.82%
|
|
|
(14)
|
Type
of Reporting Person (See Instructions)
|
IN
|
Page 8
of
23
Pages
CUSIP
NO.
5021600-10-4
Introduction
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"), which is a wholly owned subsidiary of SBL, Barry H. Golsen,
Steven J. Golsen and Linda Rappaport (together, the “Golsen
Group”).
This
statement constitutes Amendment No. 32 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
Amendment No. 32 is being filed as a result of a change in the facts contained
in the Schedule 13D. The change is due to (a) the adoption of the 10B5-1 Sales
Plan, dated December 5, 2006, between Jack Golsen, an individual, and Capital
West Securities, Inc. (the "Broker"), providing for the sale of up to 25,000
shares of Common Stock, and (b) the adoption of the 10B5-1 Sales Plan, dated
December 5, 2006, between Jack E. Golsen, Trustee of the Jack E. Golsen 1992
Revocable Trust, and the Broker, providing for the sale of up to 25,000 shares
of Common Stock (together, the “10B5-1 Plans”).
In
addition to the foregoing, reference is made to (a) Item 5(c) of this Amendment
No. 32 for a disclosure of other transactions in the Common Stock that were
effected by certain reporting persons during the past 60 days from the filing
date of this Amendment No. 32 and (b) Item 6 of this Amendment No. 32 for other
agreements relating to Company securities held by certain reporting
persons.
Item1.
Security and Issuer.
Item
1 of
this Schedule 13D is unchanged.
Item
2. Identity and Background.
Item
2 of
this Schedule 13D is unchanged.
Item
3. Source and Amount of Funds or Other
Consideration.
As
disclosed in Item 5(c), each of Barry H. Golsen and Steven J. Golsen acquired
shares of Common Stock upon the exercise of Company incentive stock options
using their personal funds.
Page
9
of
23
Pages
CUSIP
NO.
5021600-10-4
This
Item
3 is not applicable to the other agreements and understandings described in
Item
6 of this Amendment 32.
Item
4. Purpose
of Transaction.
The
reporting persons do not presently have any plans or proposals required to
be
reported under Item 4 of this Schedule 13D, except as described
below.
10B5-1
Plans.
On
December 5, 2006, certain of the reporting persons entered into the 10B5-1
Plans
listed in the Introduction to this Amendment 32. The 10B5-1 Plans provide for
the sale of up to an aggregate 50,000 shares of Common Stock in accordance
with
Rule 10B5-1 of the Exchange Act of 1934, as amended (the “Exchange Act”). Each
of the 10B5-1 Plans contains the following terms, among others:
|
(a)
|
each
10B5-1 Plan will terminate not later than the earlier of December
6, 2007,
or the date that all shares of Common Stock covered by such 10B5-1
Plan
have been sold in accordance with such
plan;
|
|
(b)
|
the
sale price of Common Stock sold under each 10B5-1 Plan will be
at a price
per share (before selling expenses) at or above $0.15 below market
price
or $15.00, whichever is higher;
|
|
(c)
|
all
sales will be made on the American Stock Exchange;
and
|
|
(d)
|
sales
of Common Stock under each 10B5-1 Plan will be made in the discretion
of
the Broker, subject to the terms and conditions of each 10B5-1
Plan.
|
Jayhawk
Agreement.
See
Item
6 of this Amendment No. 32 for a discussion of the Jayhawk Agreement, which
is
incorporated by reference in this Item 4.
Pledge
Agreements.
See
Item
6 of this Amendment No. 32 for a discussion of the two stock pledge agreements
covering shares of Common Stock, which is incorporated by reference in this
Item
4.
Page
10
of
23
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
32 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 | 3,869,143 (1) (2) (6) (9) | 23.18% | ||
| Sylvia H. Golsen | 3,436,781 (1) (6) (7) | 20.59% | ||
| SBL | 2,598,034 (1) (9) | 15.56% | ||
| GPC | 396,758 (8) (9) | 2.38% | ||
| Barry H. Golsen | 3,168,929 (1) (3) (6) | 18.98% | ||
| Steven J. Golsen | 2,958,653 (1) (4) (6) | 17.72% | ||
| Linda Golsen Rappaport | 2,808,138 (1) (5) (6) | 16.82% | ||
| ____________________ |
|
(1)
|
The
amount shown includes (i) 1,512,099 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 the Company's
Class C, Series 2 Stock owned of record by SBL; and (v) 396,758 shares
beneficially owned by SBL's wholly owned subsidiary, GPC, which includes
(1) 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, and (2)
175,325
shares that GPC has the right to acquire upon conversion of 40,500
shares
of Class C, Series 2 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.
|
Page
11
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(2)
|
The
amount shown includes (i) 25,000 shares held directly by Jack E.
Golsen;
(ii) 93,529 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 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) 176,500 shares that Jack E. Golsen may acquire
upon the exercise of Company nonqualified stock options; and
(vi) 838,747 shares owned by the Sylvia H. Golsen 1992 Revocable
Trust of which Sylvia H. Golsen is the
trustee.
|
|
(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)
89,440
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) 311,639
shares
held directly by Barry H. Golsen; (b) 34,750 shares owned of record
by the
Amy G. Rappaport Trust No. J-1, of which Barry H. Golsen is a Co-Trustee;
(c) 30,704 shares owned of record by the Joshua B. Golsen Trust No.
J-1,
of which Barry H. Golsen is a Co-Trustee; (d) 35,638 shares owned
of
record by the Adam Z. Golsen Trust No. J-1, of which Barry H. Golsen
is a
Co-Trustee; (e) 28,638 shares owned of record by the Stacy L. Rappaport
Trust No. J-1, of which Barry H. Golsen is a Co-Trustee; (f) 35,638
shares
owned of record by the Michelle L. Golsen Trust No. J-1, of which
Barry H.
Golsen is a Co-Trustee; (g) 27,638 shares owned of record by the
Lori R.
Rappaport Trust No. J-1, of which Barry H. Golsen is a Co-Trustee;
and (h)
66,250 shares which Barry H. Golsen may acquire upon exercise of
nonqualified stock options.
|
|
(4)
|
The
amount shown does not include 84,440 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) 248,915 shares held directly
by
Steven J. Golsen; (ii) 34,750 shares owned of record by the Amy G.
Rappaport Trust No. J-1, of which Steven J. Golsen is a Co-Trustee;
(iii)
30,704 shares owned of record by the Joshua B. Golsen Trust No. J-1,
of
which Steven J. Golsen is a Co-Trustee; and (iv) 46,250 shares which
Steven J. Golsen may acquire upon exercise of nonqualified stock
options.
|
Page
12
of
23
Pages
CUSIP
NO.
5021600-10-4
|
(5)
|
The
amount shown does not include 70,200 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 89,440 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)
35,638 shares owned of record by the Adam Z. Golsen Trust No. J-1,
of
which Linda F. Rappaport is a Co-Trustee; (iii) 28,638 shares owned
of
record by the Stacy L. Rappaport Trust No. J-1, of which Linda F.
Rappaport is a Co-Trustee; (iv) 35,638 shares owned of record by
the
Michelle L. Golsen Trust No. J-1 of which Linda F. Rappaport is a
Co-Trustee; and (v) 27,638 shares owned of record by the Lori R.
Rappaport
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 listed in footnote (2) above as beneficially
owned
by Jack E. Golsen (other than the 838,747 shares held by the Sylvia
H.
Golsen 1992 Revocable Trust of which Sylvia H. Golsen is
trustee).
|
Page
13 of
23
Pages
CUSIP
NO.
5021600-10-4
|
(8)
|
The
amount shown includes (i) 88,100 shares held directly by GPC, (ii)
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,
and
(iii) 175,325 shares that GPC has the right to acquire upon conversion
of
40,500 shares of Class C, Series 2 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.
|
|
(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 holders of the Class C,
Series
2 Preferred have no voting rights, except as required by law and
except
that such holders have the right to vote as a separate class to elect
two
directors, if the equivalent of six full quarterly dividends on the
Class
C, Series 2 Preferred are accrued and unpaid. This Class C, Series
2
Preferred voting right continues until all dividends due on such
shares
are paid in full. The amounts and percentages set forth in the table
reflect only the voting power of Common Stock into which the Series
B
Preferred, the Class C, Series 2 Preferred, and the Series D Preferred
are
convertible.
|
|
(10)
|
The
percentage ownership of each reporting person is based on 16,693,961
shares of Common Stock outstanding, as of November 30, 2006. 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 of the filing date of this Amendment
32 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:
|
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23
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CUSIP
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5021600-10-4
|
Person
or Entity
|
Sole
Voting and Power of Disposition
|
Shared Voting
and Power of Disposition
|
||
| Jack E. Golsen | 432,632 (1) (5) (12) | 3,436,781 (2) (3) (5) | ||
| Sylvia H. Golsen | None | 3,436,781 (2) (3) (11) | ||
| SBL | None |
2,598,034
(2) (12)
|
||
| GPC | None | 396,758 (4) (12) | ||
| Barry H. Golsen | 377,889 (6) | 2,791,040 (2) (7) | ||
| Steven J. Golsen | 295,165 (8) | 2,663,488 (2) (9) | ||
| Linda Golsen Rappaport | 82,552 | 2,725,586 (2) (10) | ||
| ___________________ |
|
(1)
|
The
amount shown includes (a) 25,000 shares held directly by Jack E.
Golsen;
(b) 93,529 shares held indirectly by the Jack E. Golsen 1992 Revocable
Trust; (c) 4,000 shares that Jack E. Golsen has the right to acquire
upon
conversion of a promissory note; (d) 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 him; and (e) 176,500 shares
that Jack
E. Golsen may acquire upon the exercise of nonqualified stock
options.
|
|
(2)
|
See
footnote (1) under paragraph (a) of this Item
5.
|
|
(3)
|
The
amount shown includes 838,747 shares of Common Stock owned by the
Sylvia
H. Golsen 1992 Revocable Trust of which Sylvia H. Golsen is
trustee.
|
|
(4)
|
See
footnote (8) under paragraph (a) of this Item
5.
|
|
(5)
|
See
footnote (6) under paragraph (a) of this Item
5.
|
|
(6)
|
The
amount shown includes (a) 311,639 shares held directly by Barry H.
Golsen;
and (b) 66,250 shares which Barry H. Golsen may acquire upon exercise
of
nonqualified stock options of the
Company.
|
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15
of
23
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CUSIP
NO.
5021600-10-4
|
(7)
|
The
amount shown does not include 89,440 shares owned of record by the
Barry
H. Golsen 1992 Trust, of which Barry H. Golsen has no voting or
dispositive power and 533 shares that Barry Golsen's wife owns in
which
Barry Golsen disclaims beneficial ownership. Such amount does include
(a)
34,750 shares owned of record by the Amy G. Rappaport Trust No. J-1,
of
which Barry H. Golsen is a Co-Trustee; (b) 30,704 shares owned of
record
by the Joshua B. Golsen Trust No. J-1, of which Barry H. Golsen is
a
Co-Trustee; (c) 35,638 shares owned of record by the Adam Z. Golsen
Trust No. J-1, of which Barry H. Golsen is a Co-Trustee; (d) 28,638
shares
owned of record by the Stacy L. Rappaport Trust No. J-1, of which
Barry H.
Golsen is a Co-Trustee; (e) 35,638 shares owned of record by the
Michelle
L. Golsen Trust No. J-1, of which Barry H. Golsen is a Co-Trustee;
and (f)
27,638 shares owned of record by the Lori R. Rappaport Trust No.
J-1, of
which Barry H. Golsen is a
Co-Trustee.
|
|
(8)
|
The
amount shown includes (a) 248,915 shares held directly by Steven
J.
Golsen; and (b) 46,250 shares which Steven J. Golsen may acquire
upon
exercise of nonqualified stock options of the
Company.
|
|
(9)
|
The
amount shown does not include 84,440 shares 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) 34,750 shares owned of
record
by the Amy G. Rappaport Trust No. J-1, of which Steven J. Golsen
is a
Co-Trustee; and (b) 30,704 shares 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 70,200 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 89,440 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) 35,638 shares owned of record by the Adam Z. Golsen
Trust
No. J-1, of which Linda F. Rappaport is a Co-Trustee; (ii) 28,638
shares
owned of record by the Stacy L. Rappaport Trust No. J-1, of which
Linda F.
Rappaport is a Co-Trustee; (iii) 35,638 shares owned of record by
the
Michelle L. Golsen Trust No. J-1, of which Linda F. Rappaport is
a
|
Page
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CUSIP
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5021600-10-4
Co-Trustee;
and (iv) 27,638 shares owned of record by the Lori R. Rappaport 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.
|
|
(12)
|
See
footnote (9) 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
reporting persons effected transactions in the Common Stock, as
follows:
|
(i) On
November 20, 2006, Barry H. Golsen acquired 8,750 shares of Common Stock from
the Company upon the exercise of Company incentive stock options for an
aggregate exercise price of $26,250 or $3.00 per share; and
(ii) On
November 29, 2006, Steven J. Golsen acquired 8,750 shares of Common Stock from
the Company upon the exercise of Company incentive stock options for an
aggregate exercise price of $26,250 or $3.00 per share.
|
(d)
|
See
Item 6 below.
|
|
(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 set forth below.
10B5-1
Plans.
The
reporting persons who have
entered into the 10B5-1 Plans listed in the Introduction to this Amendment
No.
32 have authorized Capital West Securities, Inc. to sell, in
Page
17
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Pages
CUSIP
NO.
5021600-10-4
the
aggregate, up to 50,000 shares of Common Stock pursuant to the terms of their
respective 10B5-1 Plans. See Item 4 of this Amendment No. 32 for a description
of certain terms of the 10B5-1 Plans, which description is qualified in its
entirety by reference to the terms of the 10B5-1 Plan attached as Exhibit 99.20
to this Amendment No. 32.
Jayhawk
Agreement.
On
November 10, 2006, the Company entered into an Agreement (the “Agreement”)
with
Kent C. McCarthy, Jayhawk Capital Management, L.L.C., Jayhawk Institutional
Partners, L.P., and Jayhawk Investments, L.P. (collectively, the “Jayhawk
Group”). The Agreement provides that if the Company undertakes, in its sole
discretion, within one year from the date of the Agreement, a tender or
exchange offer for the Company’s $3.25 Convertible Exchangeable Class C
Preferred Stock, Series 2 (the “Series 2 Preferred”), the Jayhawk Group will
(a) tender or exchange an aggregate total of only 180,450 shares of the
Series 2 Preferred owned by the Jayhawk Group and (b) waive their rights to
all accrued and unpaid dividends on the Series 2 Preferred tendered or
exchanged.
The
obligations of the Jayhawk Group described in the foregoing clauses (a) and
(b) are subject to certain conditions, including: (i) the
consideration to be paid for each share tendered or exchanged is to be 7.4
shares of Common Stock, (ii) the Board of Directors of the Company shall
have received an opinion that the tender or exchange offer and the consideration
therefor is fair to the stockholders of the Company, (iii) the approval by
the holders of the Common Stock and Series 2 Preferred of certain amendments
to
the Certificate of Designations of the Series 2 Preferred as described below
and, if required by the rules of the AMEX, the approval by the holders of the
Common Stock of the issuance of the shares of Common Stock pursuant to the
transaction; and (iv) the Golsen Group shall only exchange or tender 26,467
shares of the 49,550 shares of Series 2 Preferred beneficially owned by them.
As
of December 22, 2006, based on the Form 4 Statements of Changes in Beneficial
Ownership filed by members of the Jayhawk Group, the Jayhawk Group is the
beneficial and record of 344,800 shares of Series 2 Preferred. Such ownership
represents the power to vote approximately 69% of the total votes held by all
holders of Series 2 Preferred, which is sufficient to approve the amendments
to
the certificate of Designation of the Series 2 Preferred described
below on behalf of the Series 2 Preferred.
Page
18
of
23
Pages
CUSIP
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5021600-10-4
The
Agreement also provides that the Jayhawk Group agrees to vote its shares of
Common Stock and Series 2 Preferred to amend the Certificate of Designations
of
the Series 2 Preferred to (a) allow the Company to acquire shares of its
Common Stock for a period of five years from the date of completion of the
tender or exchange offer, without the approval of the holders of the Series
2
Preferred, notwithstanding that accrued and unpaid dividends may exist with
respect to the Series 2 Preferred, and (b) provide that the existing right
of the holders of Series 2 Preferred to elect two directors to the Company’s
Board of Directors when dividends on the Series 2 Preferred are unpaid may
be
exercised only if and so long as at least 140,000 shares of Series 2 Preferred
remain issued and outstanding.
The
Certificate of Designations of the Series 2 Preferred currently prohibits the
Company from purchasing, redeeming or otherwise acquiring any shares of Common
Stock or other securities ranking junior to the Series 2 Preferred as to
dividends and rights upon liquidation and provides that when dividends on the
Series 2 Preferred are in arrears and unpaid in an amount equal to at least
six
quarterly dividends the Series 2 Preferred holders have the exclusive right
to
vote for and elect two additional directors during period the dividends remain
in arrears.
The
foregoing is a summary of the material terms of the Agreement. The above
discussion is qualified in its entirety by reference to the Agreement, a copy
of
which is filed herewith as Exhibit 99.19 to this Amendment No. 32. The
Jayhawk Agreement was previously disclosed by the Company in its Form 8-K,
filed
with the Securities and Exchange Commission (“SEC”) on November 14, 2006, as
amended by the Form 8-K/A, filed with the SEC on November 21, 2006.
Pledge
Agreements.
On
April
12, 2006, SBL Corporation (“SBL”) pledged 420,000 shares of Common Stock
pursuant to a Commercial Pledge Agreement, dated the same date (the “Pledge
Agreement”) to secure a promissory note, dated the same date, from First
Industries Capital Corporation, a subsidiary of GPC, to The Bank of Union.
The
promissory note has an original principal amount of approximately $2,800,000
and
a maturity date of April 17, 2009. In addition to standard default and similar
provisions
Page
19
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23
Pages
CUSIP
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5021600-10-4
contained
in the Security Agreement, The Bank of Union retains the right to all dividends
paid in connection with the collateral. The 420,000 shares pledged pursuant
to
the Pledge Agreement are also pledged under the Security Agreement, dated March
14, 2002 with The Bank of Union, which is included as Exhibit 99.15 to this
Amendment 32. The total number of shares of Common Stock pledged by members
of
the Golsen Group to The Bank of Union is 420,000.
On
July
5, 2006, the Sylvia H. Golsen Trust, of which Sylvia H. Golsen is trustee,
pledged 370,000 shares of Common Stock pursuant to a Security Agreement, dated
the same date (the “Security Agreement”) to secure a promissory note, dated the
same date, from SBL to Bank of the West. The promissory note was issued to
refinance an existing loan with Bank of the West. The promissory note has an
original principal amount of $1,300,000 and a maturity date of July 5, 2013.
In
addition to standard default provisions contained in the Security Agreement,
Bank of the West retains the right to all dividends paid in connection with
the
collateral. The Security Agreement replaces a prior Security Agreement, dated
December 19, 2005, pursuant to which Sylvia H. Golsen pledged 370,000 shares
to
secure the prior loan.
Item
7. Materials
to be Filed as Exhibits.
|
24.1
|
Powers
of Attorney executed by Barry H. Golsen, Steven J. 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.
|
|
99.2
|
Convertible
Note between the Company and Jack E. Golsen 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.
|
Page
20
of
23
Pages
CUSIP
NO.
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|
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.
|
|
99.6
|
Agreement
of Sylvia H. Golsen as to joint filing of this Schedule 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.
|
Page
21 of
23
Pages
CUSIP
NO.
5021600-10-4
|
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 December 12, 2003, executed by SBL Corporation in
favor
of Bank of the West, is attached as Exhibit 99.18 to
Amendment No. 28 and is incorporated herein by
reference.
|
|
99.14
|
Security
Agreement, dated December 12, 2003, executed by Linda F. Rappaport
in
favor of Bank of the West, is attached as Exhibit 99.19 to Amendment
No.
28 and is incorporated herein by
reference.
|
|
99.15
|
Security
Agreement, dated March 14, 2002, between the Bank of Union (the “Bank”),
Golsen Petroleum Corporation, SBL corporation, Jack E. Golsen, Jack
E.
Golsen Trust, Sylvia H. Golsen, and Sylvia H. Golsen Trust (the
“Pledgors”), is listed as Exhibit 99.17 of Amendment No. 29 to this
Schedule 13D and is incorporated herein by
reference.
|
|
99.16
|
Security
Agreement, dated May 10, 2004, executed by the Linda F. Rappaport
Trust in
favor of Bank of the West.
|
|
99.17
|
Security
Agreement, dated July 5, 2006, executed by the Sylvia H. Golsen Trust
in
favor of Bank of the West.
|
|
99.18
|
Commercial
Pledge Agreement, dated April 12, 2006, executed by SBL Corporation
in
favor of The Bank of Union.
|
|
99.19
|
Agreement,
dated November 10, 2006, between the Company and Kent C. McCarthy,
Jayhawk
Capital Management, L.L.C., Jayhawk Institutional Partners, L.P.,
and
Jayhawk Investments, L.P.
|
|
99.20
|
10B5-1
Sales Plan, dated December 5, 2006, between Jack Golsen and Capital
West
Securities, Inc. (the "Broker") covering the sale of up to 25,000
shares
of Company Common Stock. A substantially similar 10B5-1 Sales Plans
was
entered into on December 5, 2006, by Jack E. Golsen, Trustee of the
Jack
E. Golsen Revocable Trust covering the sale of up to 25,000 shares
of
Company Common Stock, a copy of which will be provided to the Commission
upon request.
|
Page
22 of
23
Pages
CUSIP
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5021600-10-4
SIGNATURE
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:
December 29, 2006.
/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/
Sylvia H. Golsen *
Sylvia
H.
Golsen
SBL
CORPORATION
By: /s/
Jack E. Golsen *
Jack
E.
Golsen, President
Page
23 of
23
Pages
|
SECURITY
AGREEMENT Stocks, Bonds and Possessory Collateral
|
DATE
OF AGREEMENT
05/10/2004
|
||
|
DEBTOR
NAME AND ADDRESS
|
PLEDGOR
NAME AND ADDRESS
|
LENDER
NAME AND ADDRESS
|
|
|
SBL
Corporation
P.O.
Box 705
Oklahoma
City, OK 73101
|
Linda
F. Rappaport 1992 Trust
|
The
Bank Of The West
Oklahoma
City Branch
4801
Gaillardia Parkway, Suite 190
Oklahoma
City, OK 73142
|
|
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. If the Collateral
includes a certificate of deposit maintained with Lender, Lender may place
a
hold on such certificate(s) of deposit.
For
purposes of this Agreement, any term used in the Uniform Commercial Code,
as
adopted and revised from time to time in the State of Oklahoma (“UCC”), and not
defined in this Agreement has the meaning given to the term in the UCC. Debtor’s
location (if other than the address reflected above is in the state of
_______________.
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
|
|
See
Attached Exhibit “A”
|
|
|
(B)
|
ALL
PROCEEDS of the specifically described Collateral regardless of
kind,
character or form (including, but not limited to, renewals, extensions,
redeposits, reissues or any other changes in form of the rights
represented thereby), together with any stock rights, rights to
subscribe,
liquidating dividends, stock dividends, dividends paid in stock
or other
property, new securities, or any other property to which Undersigned
may
hereafter become entitled to receive by reason of the specifically
described Collateral; and in the event Undersigned receives any
such
property, Undersigned agrees immediately to deliver same to Lender
to be
held by Lender in the same manner as Collateral specifically described
above.
|
|
(C)
|
OTHER
PROPERTY which shall be deemed Collateral shall include all dividends
and
interest paid in cash on the Collateral, provided, however, that
Lender at
its option may permit such dividends and/or interest to be received
and
retained by Undersigned, but provided further, that Lender may
at any time
terminate such permission. Collateral shall further include without
limitation, all money, funds, or property owned by Undersigned
which is
now or which hereafter may be possessed or controlled by Lender
whether by
pledge, deposit or otherwise.
|
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: /s/
Charlie Smith
Charlie
Smith, Loan Operator
|
By: /s/
Heidi Brown Shear
Heidi
Brown Shear, Trustee
|
Form
0406764 FCHAR12052000120235P (C)
Copyright 7/97 American Bank Systems
ADDITIONAL
PROVISIONS
UNDERSIGNED
EXPRESSLY WARRANTS, COVENANTS AND AGREES:
|
DEBTOR
NAME AND ADDRESS
|
||
|
1. Financial
Information.
All loan applications, balance sheets, earnings statements, other
financial information and other representations which have been
or may
hereafter be, furnished Lender to induce it to enter into or continue
a
financial transaction with Borrower fairly represent the financial
condition of Borrower as of the date and for the period shown therein,
and
all other information, reports, documents, papers and data furnished
to
Lender are or shall be, at the time furnished, accurate and correct
in all
material respects and complete insofar as completeness may be necessary
to
give Lender a true and accurate knowledge of the subject matter.
There has
been no material change in the financial condition of Borrower
since the
effective date of the last furnished financial information which
has not
been reported to Lender in writing. (The provisions of this paragraph
do
not apply to Debtors who are different parties from
Borrower.)
2. Furnishing
of Information on Collateral.
Undersigned will furnish Lender information adequate to identify
with
accuracy all Collateral in a form and substance and at times as
may be
requested by Lender. Undersigned will also upon request deliver
to Lender
true copies of purchase orders, shipping and delivery receipts
and
invoices evidencing and describing the Collateral. Debtor will
execute
such documents as Lender may from time to time require to enable
Lender to
perfect the security interest granted hereby and to receive proceeds
of
and distributions from or interests in the Collateral.
3. Adequacy
of Collateral.
After written notice of such fact and within the time specified
in such
notice, Debtor agrees to deliver to Lender additional collateral
satisfactory to Lender, if Lender in its sole discretion determines
that
the Collateral is inadequate to secure the obligations of Borrower
to
Lender covered by this Agreement or the Lender deems itself otherwise
insecure.
4. Debtor’s
Name and Location.
Debtor’s exact legal name is as set forth on the reverse side of this
Agreement. If Debtor is an individual, Debtor’s principal residence is at
Debtor’s address as set forth herein. If Debtor is an entity other than
an
individual, Debtor’s location (i.e., place of business, chief executive
office or state of organization, as the case may be) is in the
state
reflected for Debtor’s address or as otherwise set forth on the reverse
side of this Agreement. Until the Indebtedness is paid in full,
Debtor
agrees that it will not change its location (for example, its state
of
incorporation, or its legal name without providing Lender 30 days
prior
written notice.
|
5. Control.
Debtor will cooperate with Lender in obtaining control with respect
to
Collateral consisting of: deposit accounts; investment property;
letter-of-credit rights; electronic chattel paper.
6. Possession.
Debtor shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where Lender chooses to
perfect
its security interest by possession in addition to the filing of
a
financing statement. Where Collateral is in the possession of a
third
party, Debtor will join with Lender in notifying the third party
of
Lender’s security interest and obtaining an acknowledgement from the third
party that it is holding the Collateral for the benefit of
Lender.
7. Taxes.
Undersigned shall promptly pay any and all taxes, assessments and
license
fees with respect to the Collateral or the use of the
Collateral.
8. Sale,
Lease or Disposition of Collateral Prohibited.
Undersigned shall not sell, transfer, exchange, lease or otherwise
dispose
of the Collateral or any part thereof or the Undersigned’s rights therein
without first obtaining the prior written consent of Lender. The
consent
of Lender may be conditioned upon any requirements which lender
deems to
be for its protection; and, it is understood and agreed that such
consent
will not be deemed to be effective unless and until such requirements
and
conditions have been fulfilled.
9. Financing
Statement.
No Financing Statement covering Collateral is on file in any public
office. Undersigned agrees to join with Lender in executing one
or more
Financing Statements, or other instrument of encumbrance, in form
satisfactory to Lender, in order to perfect, or to continue perfection
of,
the security interest of Lender which may arise hereunder.
10. Adequate
Insurance.
Undersigned at own expense, if required by Lender, shall insure
Collateral
with companies acceptable to Lender against such casualties and
in such
amounts as prudent and adequate to protect Lender or as Lender
shall
require. All insurance policies shall be written for benefit of
Undersigned and Lender as their interests appear and such policies
or
certified copies thereof evidencing same shall be furnished to
Lender
within ten days of date of this agreement. All policies of insurance
shall
provide for at least ten days prior written notice of cancellation
to
Lender. Lender may act as attorney for Undersigned in the procuring
of
insurance, in making, adjusting, and settling claims under or cancelling
such insurance and in endorsing Undersigned’s name on any drafts or checks
drawn by insurers of Collateral.
|
|
|
EVENTS
OF DEFAULT
|
||
|
Debtor
shall be in default under this Agreement upon the happening of
any of the
following events or conditions, herein called “Events of
Default”:
1. Any
warranty, covenant, agreement, representation, financial information
or
statement made or furnished to Lender by or in behalf of Borrower
or
Debtor to induce Lender to enter into this Agreement, or in conjunction
therewith, is violated or proves to have been false in any material
respect when made or furnished.
2. Any
payment required hereunder or under any note or obligation of Borrower
or
Debtor to this Lender or to others is not made when due or in accordance
with terms of the applicable contract.
3. Borrower
or Debtor defaults in the performance of any covenant, obligation,
warranty or provision contained in any Loan Agreement or in any
other note
or obligation of Borrower or Debtor to Lender or to others.
4. The
occurrence of any event or condition which results in acceleration
of the
maturity of any obligation of Borrower or Debtor to Lender to others
under
any note, indenture, agreement or undertaking.
|
5. Loss,
theft, substantial damage to or destruction of Collateral.
6. The
making of any levy against or seizure, garnishment or attachment
of any
Collateral, the consensual encumbrance thereof, or the sale, lease
or
other disposition of Collateral without the prior written consent
of
Lender as required elsewhere in this Agreement.
7. When
the judgment of Lender the Collateral becomes unsatisfactory or
insufficient in character or value, and upon request Borrower fails
to
provide additional Collateral as required by Lender.
8. Any
time Lender in its sole discretion believes the prospect of payment
or
performance of any liability, covenant, warranty or obligation
of Borrower
or Debtor is impaired.
9. The
death, dissolution, termination of existence or insolvency of Borrower
or
Debtor, the appointment of a receiver over any part of Borrower’s or
Debtor’s property or any part of the Collateral, as assignment for the
benefit of creditors or the commencement of any proceeding under
any
bankruptcy or insolvency law by or against Borrower or Debtor or
any
guarantor or surety for Borrower or Debtor.
|
|
|
REMEDIES
|
||
|
Upon
the occurrence of an Event of Default, and at any time thereafter,
Lender
may at its option and without notice or demand to Borrower or Debtor
except as otherwise provided by law, exercise any and all rights
and
remedies provided by the U.C.C., as well as all other rights and
remedies
possesses by Lender, including, but not limited to:
1. Declare
all liabilities secured hereby immediately due and payable, and/or
proceed
to enforce payment and performance of all liabilities secured
hereby.
2. Require
Debtor to assemble Collateral or evidence thereof and make it available
to
Lender at any place designated by Lender which is reasonably convenient
to
both parties.
3. Repossess
the Collateral, and for the purpose Lender is hereby granted authority
to
enter into and upon any premises on which Collateral or any part
may be
situated, and remove it as a part of such repossession.
4. Possess
all books and records evidencing or pertaining to the Collateral,
and for
this purpose Lender is hereby given authority to enter into and
upon any
premises at which such books and records or any part of them may
be
situated, and to remove them.
5. Apply
that portion of the Collateral consisting of cash or cash equivalent
items
such as checks, drafts or deposited funds against any liabilities
of
Borrower selected by Lender, and for this purpose Debtor agrees
that cash
or equivalents will be considered identical to cash proceeds. Lender
shall
have the right immediately and without further action by it to
set all
against the liabilities secured hereby all money owed by Lender
to
Borrower, whether due or not due, and Lender shall be deemed to
have
exercised such right to set off and to have made a charge against
such
money at the time of any acceleration upon default even though
such
charges made are entered on the Lender’s books subsequent
thereto.
6. Transfer
any of the Collateral or evidence thereof into its own name or
that of a
nominee and receive the proceeds therefrom and hold the same as
security
for the liabilities of
|
Borrower
to Lender or apply it on or against any such liability. Lender
may also
demand, collect, receipt for, settle, compromise, adjust, sue for,
foreclose, release or realize upon Collateral in its own name or
in the
name of the Debtor as Lender may determine.
7. Sell
or otherwise dispose of the Collateral. Unless Collateral in hole
or part
is perishable or threatens to decline speedily in value or is of
a type
customarily sold on a recognized market, Lender will give Borrower
and
Debtor reasonable notice, as required by law, of the time and place
of any
public sale, or of the time after which any private sale or other
disposition is to be made. Any requirement of notice shall be met
if
notice is mailed, postage prepaid, to the address provided for
herein at
least ten days before sale or other disposition or action. Lender
shall be
entitled to, and Undersigned shall be liable for, all reasonable
costs and
expenditures incurred in realizing on its security interest, including
without limitation, court costs, fees for replevin bonds, storage,
repossession costs, repair and preparation costs for sale, selling
costs
and reasonable attorneys’ fees as set forth in any promissory note. All
such costs shall be secured by the Security interest in the Collateral
covered herein.
8. Lender
shall not be liable for failure to collect any account, enforce
any
contract right, or for any other act or omission on the part of
Lender,
its officers, agents or employees, except as the same constitutes
a lack
of good faith or failure to act in a commercially reasonable manner.
Lender shall have acted in a commercially reasonable manner if
its action
or non-action is consistent with the general usage of lenders in
the area
of Lender’s location at the time the action or non-action occurs, but this
standard shall not constitute disapproval of any procedures which
may be
otherwise reasonable under the circumstances nor require Lender
to take
necessary steps to preserve rights against prior parties in an
instrument
or chattel paper.
|
|
|
GENERAL
|
||
|
1. Expenditures
of Lender.
At its option and after any written notice to Undersigned required
by law,
which Undersigned hereby agrees is sufficient if mailed, postage
prepaid,
to the address of Undersigned provided for herein at least ten
days before
the commencement of the performance of the duties specified therein,
it is
agreed Lender may discharge taxes, liens, security interests or
other
encumbrances on the Collateral and may pay for the repair of any
damage to
the Collateral, for the maintenance and preservation thereof and
for
insurance thereon. Undersigned shall be liable for and agrees to
pay
Lender for all expenditures of Lender for taxes on Collateral,
for the
discharge of liens, security interests or other encumbrances on
the
Collateral, for the repair of any damage to Collateral, and for
all costs,
attorneys’ fees and other disbursements of Lender in connection with the
foregoing. Undersigned agrees promptly to reimburse Lender for
all such
expenditures and until such reimbursement the amounts of such expenditures
shall be considered a liability of Undersigned to Lender which
is secured
by this Agreement. In addition, Undersigned shall be liable for
and agrees
to pay Lender for all costs, attorneys’ fees and other disbursements of
Lender as allowed by law or provided for herein in the enforcement
or
collection of any note, warranty or liability of Undersigned to
Lender, or
in the realization upon or the enforcement or collection of any
account
receivable, contract right, promissory note, chattel paper, instrument,
document or other Collateral in which Lender has a security interest.
Undersigned agrees to reimburse Lender for all such expenditures,
and
until such reimbursement the amount of such expenditures shall
be
considered a liability of Undersigned to lender which is secured
by this
Agreement.
2. Right
of Offset.
Any property, tangible or intangible of Undersigned in possession
of
Lender at any time during the term hereof, or any indebtedness
due from
Lender to Undersigned and any deposit or credit balances due from
Lender
to Undersigned, or any of the foregoing of any party hereto, is
pledged to
secure payments hereof and may at any time while the whole or any
part of
Undersigned’s indebtedness to Lender remains unpaid, whether before or
after maturity thereof, be appropriated, held or applied toward
the
payment of any obligation of Undersigned to Lender.
3. Applicable
Law.
This Agreement shall be construed and enforced in accordance with
the laws
of the State of Oklahoma, except to the extent that the UCC provides
for
application of the law where the Debtor or the collateral is located
(if
other than Oklahoma) as the case may be.
|
4. Waivers.
No act, delay or omission, including Lender’s waiver of remedy because of
any default hereunder, shall constitute a waiver of any of the
Lender’s
rights and remedies under this agreement between the parties. All
rights
and remedies of Lender are cumulative and may be exercised singularly
or
concurrently, and the exercise of any one or more remedy will not
be a
waiver of any other. No waiver, change, modification or discharge
of any
of Lender’s rights or of Undersigned’s duties as so specified or allowed
will be effective unless in writing and signed by a duly authorized
officer of Lender, and any such waiver will not be a bar to the
exercise
of any right or remedy on any subsequent default, Undersigned hereby
waives: (a) all demands and notices of any action taken by Lender
under
this Agreement or any other agreement between the parties or in
connection
with any notes; (b) any indulgence Agreement or any other of Lender;
and
(c) any substitution for, exchange of, or release of all or any
part of
the Collateral or of other collateral securing obligations of Borrower
to
Lender. Undersigned also consents to the addition or release of
person
liable on any obligation of Borrower to Lender.
5. Agreement
Binding on Assigns.
This Agreement shall insure to the benefit of the successors and
assigns
of Lender and shall be binding upon the heirs, executors, administrators,
successors and assigns of Undersigned.
6. Rights
of Lender Assignable.
Lender at any time and at its option may pledge, transfer or assign
its
rights under this Agreement in whole or in part, and any pledge,
transferee or assignee shall have all the rights of Lender as to
the
rights or parts thereof so pledged, transferred or assigned. The
rights of
the Undersigned hereunder may not be assigned.
7. Joint
and Several Responsibility of Debtor.
If more than one Undersigned executes this Agreement, their responsibility
hereunder shall be joint and several and the reference to Undersigned
herein shall be deemed to refer to each Undersigned signing this
Agreement.
8. Severability
of Provisions.
If any provision of this Agreement shall for any reason be held
to be
invalid or unenforceable, such invalidity or unenforceability shall
not
affect any other provision hereof, and this Agreement shall be
construed
as if such invalid or unenforceable provision had never been contained
herein.
9. Copies.
A carbon, photographic, or other reproduction of this Security
Agreement
or of any financing statement prepared or filed with respect hereto
is
sufficient as a financing statement.
10. Notice
of Name Change, etc.
Undersigned will immediately notify Lender of any change in his,
her, or
their name, identity, or organizational or corporate
structure.
|
|
EXHIBIT
“A”
|
Cert.
#OKS11992
|
3,600
|
shares
|
February
10, 2004
|
|
Cert.
#OKS11228
|
4,000
|
shares
|
December
20, 1996
|
|
Cert.
#OKS7683
|
3,000
|
shares
|
December
28, 1994
|
|
Cert.
#OKS3440
|
28,570
|
shares
|
December
31, 1992
|
|
Cert.
#OKS3509
|
1,425
|
shares
|
December
31, 1992
|
|
Cert.
#OKS3510
|
1,425
|
shares
|
December
31, 1992
|
|
Cert.
#OKS3511
|
28,570
|
shares
|
December
31, 1992
|
|
Cert.
#OKS3527
|
1,425
|
shares
|
December
31, 1992
|
|
Cert.
#OKS3539
|
1,425
|
shares
|
December
31, 1992
|
|
Cert.
#OKS10860
|
5,000
|
shares
|
December
16, 1995
|
|
Cert.
#OKS11460
|
5,000
|
shares
|
December
31, 1975
|
|
Cert.
#OKS12022
|
3,600
|
shares
|
April
22, 2004
|
|
Total
|
______
87,040
|
|
SECURITY
AGREEMENT Stocks, Bonds and Possessory Collateral
|
DATE
OF AGREEMENT
07/05/2006
|
||
|
DEBTOR
NAME AND ADDRESS
|
PLEDGOR
NAME AND ADDRESS
|
LENDER
NAME AND ADDRESS
|
|
|
SBL
Corporation
16
South Pennsylvania
Oklahoma
City, OK 73101
|
Sylvia
H. Golsen Trust 01/08/1993
|
The
Bank Of The West
Oklahoma
City Branch
4801
Gaillardia Parkway, Suite 190
Oklahoma
City, OK 73142
|
|
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. If the Collateral
includes a certificate of deposit maintained with Lender, Lender may place
a
hold on such certificate(s) of deposit.
For
purposes of this Agreement, any term used in the Uniform Commercial Code,
as
adopted and revised from time to time in the State of Oklahoma (“UCC”), and not
defined in this Agreement has the meaning given to the term in the UCC. Debtor’s
location (if other than the address reflected above is in the state of
_______________.
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
|
|
370,000
share(s) of LSB Industries, Inc. common stock evidenced by certificate
numbers SEE EXHIBIT “A”.
|
|
|
(B)
|
ALL
PROCEEDS of the specifically described Collateral regardless of
kind,
character or form (including, but not limited to, renewals, extensions,
redeposits, reissues or any other changes in form of the rights
represented thereby), together with any stock rights, rights to
subscribe,
liquidating dividends, stock dividends, dividends paid in stock
or other
property, new securities, or any other property to which Undersigned
may
hereafter become entitled to receive by reason of the specifically
described Collateral; and in the event Undersigned receives any
such
property, Undersigned agrees immediately to deliver same to Lender
to be
held by Lender in the same manner as Collateral specifically described
above.
|
|
(C)
|
OTHER
PROPERTY which shall be deemed Collateral shall include all dividends
and
interest paid in cash on the Collateral, provided, however, that
Lender at
its option may permit such dividends and/or interest to be received
and
retained by Undersigned, but provided further, that Lender may
at any time
terminate such permission. Collateral shall further include without
limitation, all money, funds, or property owned by Undersigned
which is
now or which hereafter may be possessed or controlled by Lender
whether by
pledge, deposit or otherwise.
|
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: /s/
Charlie Smith
Charlie
Smith, Loan Operator
|
By: /s/
Sylvia H. Golsen
Sylvia
H. Golsen, Trustee of Sylvia H. Golsen 01/08/1993 Trust
|
Form
0406764 FCHAR12052000120235P (C)
Copyright 7/97 American Bank Systems
ADDITIONAL
PROVISIONS
UNDERSIGNED
EXPRESSLY WARRANTS, COVENANTS AND AGREES:
|
DEBTOR
NAME AND ADDRESS
|
||
|
1. Financial
Information.
All loan applications, balance sheets, earnings statements, other
financial information and other representations which have been
or may
hereafter be, furnished Lender to induce it to enter into or continue
a
financial transaction with Borrower fairly represent the financial
condition of Borrower as of the date and for the period shown therein,
and
all other information, reports, documents, papers and data furnished
to
Lender are or shall be, at the time furnished, accurate and correct
in all
material respects and complete insofar as completeness may be necessary
to
give Lender a true and accurate knowledge of the subject matter.
There has
been no material change in the financial condition of Borrower
since the
effective date of the last furnished financial information which
has not
been reported to Lender in writing. (The provisions of this paragraph
do
not apply to Debtors who are different parties from
Borrower.)
2. Furnishing
of Information on Collateral.
Undersigned will furnish Lender information adequate to identify
with
accuracy all Collateral in a form and substance and at times as
may be
requested by Lender. Undersigned will also upon request deliver
to Lender
true copies of purchase orders, shipping and delivery receipts
and
invoices evidencing and describing the Collateral. Debtor will
execute
such documents as Lender may from time to time require to enable
Lender to
perfect the security interest granted hereby and to receive proceeds
of
and distributions from or interests in the Collateral.
3. Adequacy
of Collateral.
After written notice of such fact and within the time specified
in such
notice, Debtor agrees to deliver to Lender additional collateral
satisfactory to Lender, if Lender in its sole discretion determines
that
the Collateral is inadequate to secure the obligations of Borrower
to
Lender covered by this Agreement or the Lender deems itself otherwise
insecure.
4. Debtor’s
Name and Location.
Debtor’s exact legal name is as set forth on the reverse side of this
Agreement. If Debtor is an individual, Debtor’s principal residence is at
Debtor’s address as set forth herein. If Debtor is an entity other than
an
individual, Debtor’s location (i.e., place of business, chief executive
office or state of organization, as the case may be) is in the
state
reflected for Debtor’s address or as otherwise set forth on the reverse
side of this Agreement. Until the Indebtedness is paid in full,
Debtor
agrees that it will not change its location (for example, its state
of
incorporation, or its legal name without providing Lender 30 days
prior
written notice.
|
5. Control.
Debtor will cooperate with Lender in obtaining control with respect
to
Collateral consisting of: deposit accounts; investment property;
letter-of-credit rights; electronic chattel paper.
6. Possession.
Debtor shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where Lender chooses to
perfect
its security interest by possession in addition to the filing of
a
financing statement. Where Collateral is in the possession of a
third
party, Debtor will join with Lender in notifying the third party
of
Lender’s security interest and obtaining an acknowledgement from the third
party that it is holding the Collateral for the benefit of
Lender.
7. Taxes.
Undersigned shall promptly pay any and all taxes, assessments and
license
fees with respect to the Collateral or the use of the
Collateral.
8. Sale,
Lease or Disposition of Collateral Prohibited.
Undersigned shall not sell, transfer, exchange, lease or otherwise
dispose
of the Collateral or any part thereof or the Undersigned’s rights therein
without first obtaining the prior written consent of Lender. The
consent
of Lender may be conditioned upon any requirements which lender
deems to
be for its protection; and, it is understood and agreed that such
consent
will not be deemed to be effective unless and until such requirements
and
conditions have been fulfilled.
9. Financing
Statement.
No Financing Statement covering Collateral is on file in any public
office. Undersigned agrees to join with Lender in executing one
or more
Financing Statements, or other instrument of encumbrance, in form
satisfactory to Lender, in order to perfect, or to continue perfection
of,
the security interest of Lender which may arise hereunder.
10. Adequate
Insurance.
Undersigned at own expense, if required by Lender, shall insure
Collateral
with companies acceptable to Lender against such casualties and
in such
amounts as prudent and adequate to protect Lender or as Lender
shall
require. All insurance policies shall be written for benefit of
Undersigned and Lender as their interests appear and such policies
or
certified copies thereof evidencing same shall be furnished to
Lender
within ten days of date of this agreement. All policies of insurance
shall
provide for at least ten days prior written notice of cancellation
to
Lender. Lender may act as attorney for Undersigned in the procuring
of
insurance, in making, adjusting, and settling claims under or cancelling
such insurance and in endorsing Undersigned’s name on any drafts or checks
drawn by insurers of Collateral.
|
|
|
EVENTS
OF DEFAULT
|
||
|
Debtor
shall be in default under this Agreement upon the happening of
any of the
following events or conditions, herein called “Events of
Default”:
1. Any
warranty, covenant, agreement, representation, financial information
or
statement made or furnished to Lender by or in behalf of Borrower
or
Debtor to induce Lender to enter into this Agreement, or in conjunction
therewith, is violated or proves to have been false in any material
respect when made or furnished.
2. Any
payment required hereunder or under any note or obligation of Borrower
or
Debtor to this Lender or to others is not made when due or in accordance
with terms of the applicable contract.
3. Borrower
or Debtor defaults in the performance of any covenant, obligation,
warranty or provision contained in any Loan Agreement or in any
other note
or obligation of Borrower or Debtor to Lender or to others.
4. The
occurrence of any event or condition which results in acceleration
of the
maturity of any obligation of Borrower or Debtor to Lender to others
under
any note, indenture, agreement or undertaking.
|
5. Loss,
theft, substantial damage to or destruction of Collateral.
6. The
making of any levy against or seizure, garnishment or attachment
of any
Collateral, the consensual encumbrance thereof, or the sale, lease
or
other disposition of Collateral without the prior written consent
of
Lender as required elsewhere in this Agreement.
7. When
the judgment of Lender the Collateral becomes unsatisfactory or
insufficient in character or value, and upon request Borrower fails
to
provide additional Collateral as required by Lender.
8. Any
time Lender in its sole discretion believes the prospect of payment
or
performance of any liability, covenant, warranty or obligation
of Borrower
or Debtor is impaired.
9. The
death, dissolution, termination of existence or insolvency of Borrower
or
Debtor, the appointment of a receiver over any part of Borrower’s or
Debtor’s property or any part of the Collateral, as assignment for the
benefit of creditors or the commencement of any proceeding under
any
bankruptcy or insolvency law by or against Borrower or Debtor or
any
guarantor or surety for Borrower or Debtor.
|
|
|
REMEDIES
|
||
|
Upon
the occurrence of an Event of Default, and at any time thereafter,
Lender
may at its option and without notice or demand to Borrower or Debtor
except as otherwise provided by law, exercise any and all rights
and
remedies provided by the U.C.C., as well as all other rights and
remedies
possesses by Lender, including, but not limited to:
1. Declare
all liabilities secured hereby immediately due and payable, and/or
proceed
to enforce payment and performance of all liabilities secured
hereby.
2. Require
Debtor to assemble Collateral or evidence thereof and make it available
to
Lender at any place designated by Lender which is reasonably convenient
to
both parties.
3. Repossess
the Collateral, and for the purpose Lender is hereby granted authority
to
enter into and upon any premises on which Collateral or any part
may be
situated, and remove it as a part of such repossession.
4. Possess
all books and records evidencing or pertaining to the Collateral,
and for
this purpose Lender is hereby given authority to enter into and
upon any
premises at which such books and records or any part of them may
be
situated, and to remove them.
5. Apply
that portion of the Collateral consisting of cash or cash equivalent
items
such as checks, drafts or deposited funds against any liabilities
of
Borrower selected by Lender, and for this purpose Debtor agrees
that cash
or equivalents will be considered identical to cash proceeds. Lender
shall
have the right immediately and without further action by it to
set all
against the liabilities secured hereby all money owed by Lender
to
Borrower, whether due or not due, and Lender shall be deemed to
have
exercised such right to set off and to have made a charge against
such
money at the time of any acceleration upon default even though
such
charges made are entered on the Lender’s books subsequent
thereto.
6. Transfer
any of the Collateral or evidence thereof into its own name or
that of a
nominee and receive the proceeds therefrom and hold the same as
security
for the liabilities of
|
Borrower
to Lender or apply it on or against any such liability. Lender
may also
demand, collect, receipt for, settle, compromise, adjust, sue for,
foreclose, release or realize upon Collateral in its own name or
in the
name of the Debtor as Lender may determine.
7. Sell
or otherwise dispose of the Collateral. Unless Collateral in hole
or part
is perishable or threatens to decline speedily in value or is of
a type
customarily sold on a recognized market, Lender will give Borrower
and
Debtor reasonable notice, as required by law, of the time and place
of any
public sale, or of the time after which any private sale or other
disposition is to be made. Any requirement of notice shall be met
if
notice is mailed, postage prepaid, to the address provided for
herein at
least ten days before sale or other disposition or action. Lender
shall be
entitled to, and Undersigned shall be liable for, all reasonable
costs and
expenditures incurred in realizing on its security interest, including
without limitation, court costs, fees for replevin bonds, storage,
repossession costs, repair and preparation costs for sale, selling
costs
and reasonable attorneys’ fees as set forth in any promissory note. All
such costs shall be secured by the Security interest in the Collateral
covered herein.
8. Lender
shall not be liable for failure to collect any account, enforce
any
contract right, or for any other act or omission on the part of
Lender,
its officers, agents or employees, except as the same constitutes
a lack
of good faith or failure to act in a commercially reasonable manner.
Lender shall have acted in a commercially reasonable manner if
its action
or non-action is consistent with the general usage of lenders in
the area
of Lender’s location at the time the action or non-action occurs, but this
standard shall not constitute disapproval of any procedures which
may be
otherwise reasonable under the circumstances nor require Lender
to take
necessary steps to preserve rights against prior parties in an
instrument
or chattel paper.
|
|
|
GENERAL
|
||
|
1. Expenditures
of Lender.
At its option and after any written notice to Undersigned required
by law,
which Undersigned hereby agrees is sufficient if mailed, postage
prepaid,
to the address of Undersigned provided for herein at least ten
days before
the commencement of the performance of the duties specified therein,
it is
agreed Lender may discharge taxes, liens, security interests or
other
encumbrances on the Collateral and may pay for the repair of any
damage to
the Collateral, for the maintenance and preservation thereof and
for
insurance thereon. Undersigned shall be liable for and agrees to
pay
Lender for all expenditures of Lender for taxes on Collateral,
for the
discharge of liens, security interests or other encumbrances on
the
Collateral, for the repair of any damage to Collateral, and for
all costs,
attorneys’ fees and other disbursements of Lender in connection with the
foregoing. Undersigned agrees promptly to reimburse Lender for
all such
expenditures and until such reimbursement the amounts of such expenditures
shall be considered a liability of Undersigned to Lender which
is secured
by this Agreement. In addition, Undersigned shall be liable for
and agrees
to pay Lender for all costs, attorneys’ fees and other disbursements of
Lender as allowed by law or provided for herein in the enforcement
or
collection of any note, warranty or liability of Undersigned to
Lender, or
in the realization upon or the enforcement or collection of any
account
receivable, contract right, promissory note, chattel paper, instrument,
document or other Collateral in which Lender has a security interest.
Undersigned agrees to reimburse Lender for all such expenditures,
and
until such reimbursement the amount of such expenditures shall
be
considered a liability of Undersigned to lender which is secured
by this
Agreement.
2. Right
of Offset.
Any property, tangible or intangible of Undersigned in possession
of
Lender at any time during the term hereof, or any indebtedness
due from
Lender to Undersigned and any deposit or credit balances due from
Lender
to Undersigned, or any of the foregoing of any party hereto, is
pledged to
secure payments hereof and may at any time while the whole or any
part of
Undersigned’s indebtedness to Lender remains unpaid, whether before or
after maturity thereof, be appropriated, held or applied toward
the
payment of any obligation of Undersigned to Lender.
3. Applicable
Law.
This Agreement shall be construed and enforced in accordance with
the laws
of the State of Oklahoma, except to the extent that the UCC provides
for
application of the law where the Debtor or the collateral is located
(if
other than Oklahoma) as the case may be.
|
4. Waivers.
No act, delay or omission, including Lender’s waiver of remedy because of
any default hereunder, shall constitute a waiver of any of the
Lender’s
rights and remedies under this agreement between the parties. All
rights
and remedies of Lender are cumulative and may be exercised singularly
or
concurrently, and the exercise of any one or more remedy will not
be a
waiver of any other. No waiver, change, modification or discharge
of any
of Lender’s rights or of Undersigned’s duties as so specified or allowed
will be effective unless in writing and signed by a duly authorized
officer of Lender, and any such waiver will not be a bar to the
exercise
of any right or remedy on any subsequent default, Undersigned hereby
waives: (a) all demands and notices of any action taken by Lender
under
this Agreement or any other agreement between the parties or in
connection
with any notes; (b) any indulgence Agreement or any other of Lender;
and
(c) any substitution for, exchange of, or release of all or any
part of
the Collateral or of other collateral securing obligations of Borrower
to
Lender. Undersigned also consents to the addition or release of
person
liable on any obligation of Borrower to Lender.
5. Agreement
Binding on Assigns.
This Agreement shall insure to the benefit of the successors and
assigns
of Lender and shall be binding upon the heirs, executors, administrators,
successors and assigns of Undersigned.
6. Rights
of Lender Assignable.
Lender at any time and at its option may pledge, transfer or assign
its
rights under this Agreement in whole or in part, and any pledge,
transferee or assignee shall have all the rights of Lender as to
the
rights or parts thereof so pledged, transferred or assigned. The
rights of
the Undersigned hereunder may not be assigned.
7. Joint
and Several Responsibility of Debtor.
If more than one Undersigned executes this Agreement, their responsibility
hereunder shall be joint and several and the reference to Undersigned
herein shall be deemed to refer to each Undersigned signing this
Agreement.
8. Severability
of Provisions.
If any provision of this Agreement shall for any reason be held
to be
invalid or unenforceable, such invalidity or unenforceability shall
not
affect any other provision hereof, and this Agreement shall be
construed
as if such invalid or unenforceable provision had never been contained
herein.
9. Copies.
A
carbon, photographic, or other reproduction of this Security Agreement
or
of any financing statement prepared or filed with respect hereto
is
sufficient as a financing statement.
10. Notice
of Name Change, etc.
Undersigned will immediately notify Lender of any change in his,
her, or
their name, identity, or organizational or corporate
structure.
|
|
EXHIBIT
“A”
L.S.B.
Industries Common Stock Pledged
Cusip
#
502160 10.4
Sylvia
H.
Golsen Trust 1/08/93 Note
#80535 SBL
Corp.
_____________________
|
Certificate
Numbers
|
#
shares
|
||
|
OKS
4029
|
10,000
|
||
|
OKS
4030
|
10,000
|
||
|
OKS
4031
|
10,000
|
||
|
OKS
4032
|
10,000
|
||
|
OKS
4033
|
10,000
|
||
|
OKS
4034
|
10,000
|
||
|
OKS
4035
|
10,000
|
||
|
OKS
4036
|
10,000
|
||
|
OKS
4037
|
10,000
|
||
|
OKS
4038
|
10,000
|
||
|
OKS
4039
|
10,000
|
||
|
OKS
4040
|
10,000
|
||
|
OKS
4041
|
10,000
|
||
|
OKS
4042
|
10,000
|
||
|
OKS
4043
|
10,000
|
||
|
OKS
4044
|
10,000
|
||
|
OKS
4045
|
10,000
|
||
|
OKS
4046
|
10,000
|
||
|
OKS
4047
|
10,000
|
||
|
OKS
4048
|
10,000
|
||
|
OKS
4049
|
10,000
|
||
|
OKS
4050
|
10,000
|
||
|
OKS
4051
|
10,000
|
||
|
OKS
4052
|
10,000
|
||
|
OKS
4053
|
10,000
|
||
|
OKS
4054
|
10,000
|
||
|
OKS
4055
|
10,000
|
||
|
OKS
4056
|
10,000
|
||
|
OKS
4057
|
10,000
|
||
|
OKS
4058
|
10,000
|
||
|
OKS
4059
|
10,000
|
||
|
OKS
4060
|
10,000
|
||
|
OKS
11116
|
20,000
|
||
|
OKS
11117
|
20,000
|
||
|
OKS
11120
|
10,000
|
||
|
TOTAL
|
370,000
|
COMMERCIAL
PLEDGE AGREEMENT
|
Principal
$2,800,327.00
|
Loan
date
04-12-2006
|
Maturity
04-17-2009
|
Loan
No.
89528
|
Call/CoB
|
Account
730738754
|
Officer
DDC
|
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.
Any
item above containing **** has been omitted due to text length
limitations.
|
|||||||
Borrower: First
Industries Capital Corporation Lender: THE
BANK
OF UNION
(TIN:
73-0738754) THE
BANK
OF UNION, EL RENO
P.O.
Box 705 2000
S. COUNTRY CLUB
RD.
Oklahoma
City, OK 73101 P.O.
BOX
1010
;
EL
RENO, OK 73036
;
(405)
262-6577
Grantor: SBL
Corporation
(TIN:
73-1477865)
16
S.
Pennsylvania
Oklahoma
City, OK 73101
THIS
COMMERCIAL PLEDGE AGREEMENT dated April 12, 2006, is made and executed
among SBL Corporation ("Grantor"); First Industries Capital Corporation
("Borrower"); 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 Grantor's present and future
rights, title and interest in and to, together with any and all present and
future additions thereto, substitutions therefore, and replacements thereof,
together with any and all present and future certificates and/or instruments
evidencing any Stock and further together with all Income and Proceeds as
described herein:
20,000
Shares of SBL Corporation Stock, Cusip No. 10763
20,000
Shares of SBL Corporation Stock, Cusip No. 10764
20,000
Shares of SBL Corporation Stock, Cusip No. 10765
20,000
Shares of SBL Corporation Stock, Cusip No. 10766
20,000
Shares of SBL Corporation Stock, Cusip No. 10767
20,000
Shares of SBL Corporation Stock, Cusip No. 10768
20,000
Shares of SBL Corporation Stock, Cusip No. 10769
20,000
Shares of SBL Corporation Stock, Cusip No. 10770
20,000
Shares of SBL Corporation Stock, Cusip No. 10771
20,000
Shares of SBL Corporation Stock, Cusip No. 10772
20,000
Shares of SBL Corporation Stock, Cusip No. 10773
20,000
Shares of SBL Corporation Stock, Cusip No. 10774
20,000
Shares of SBL Corporation Stock, Cusip No. 10775
20,000
Shares of SBL Corporation Stock, Cusip No. 10776
20,000
Shares of SBL Corporation Stock, Cusip No. 10777
20,000
Shares of SBL Corporation Stock, Cusip No. 10778
20,000
Shares of SBL Corporation Stock, Cusip No. 10779
20,000
Shares of SBL Corporation Stock, Cusip No. 10780
20,000
Shares of SBL Corporation Stock, Cusip No. 10781
20,000
Shares of SBL Corporation Stock, Cusip No. 10782
20,000
Shares of SBL Corporation Stock, Cusip No. 10783
1
CROSS-COLLATERALIZATION.
In
addition to the Note, this Agreement secures all obligations, debts and
liabilities, plus interest thereon, of either Grantor or Borrower to Lender,
or
any one or more of them, as well as all claims by Lender against Borrower and
Grantor 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 to unrelated to the purpose
of
the Note, whether voluntary or otherwise, whether due or not due, direct or
indirect, determined or undetermined, absolute or contingent, liquidated or
unliquidated, whether Borrower or Grantor 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.
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.
Financing
Statements.
Grantor
authorizes Lender to file a UCC financing statement, or alternatively, a copy
of
this Agreement to perfect Lender's security interest. At Lender's request,
Grantor additionally agrees to sign all other documents that are necessary
to
perfect, protect, and continue Lender's security interest in the Property.
Grantor will pay all filing fees, title transfer fees, and other fees and costs
involved unless prohibited by law or unless Lender is required by law to pay
such fees and costs. Grantor irrevocably appoints Lender to execute lien entry
forms and documents necessary to transfer title if there is a default. Lender
may file a copy of this Agreement as a financing statement. If Grantor changes
Grantor's name or address, or the name or address of any person granting a
security interest under this Agreement changes, Grantor will promptly notify
the
Lender of such change.
LENDER'S
RIGHTS AND OBLIGATIONS WITH REXPECT 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 Collateral. Lender shall have the following rights in addition to all other
rights Lender may have by law:
2
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 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. Grantor
also
agrees to execute any additional documents, including but not limited to, a
control agreement, necessary to perfect Lender's security interest as Lender
may
desire.
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 or 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; (d) 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.
Protection
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, amend, or to continue the security interest granted in
this Agreement or to demand termination of filings of other secured
parties.
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 expenditures 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
3
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,
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 Borrower or
Grantor.
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 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.
Insolvency.
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
proceedings, 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.
Events
Affecting Guarantor.
Any of
the preceding events occurs with respect to any Guarantor of any of the
Indebtedness or Guarantor 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 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 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 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 continue
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, and other persons as required
by
law, notice at least ten (10)
4
days
in
advance of the time and place of any public sale, or of the time after which
any
private sale may be made. However, no notice need be provided to any person
who,
after an Event of Default occurs, enters into and authenticates an agreement
waiving that person's right to notification of sale. Grantor agrees that any
requirement of reasonable notice as to Grantor is satisfied if Lender mails
notice by ordinary mail addressed to Grantor 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, not 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.
5
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 cost 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 Lender's 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 federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of Oklahoma without
regard to its conflicts of law provisions. 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
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 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.
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 circumstances. 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 on 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.
6
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.
DEFINTIOINS.
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 terms 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 First Industries Capital Corporation and includes all
co-signers and co-makers signing the Note and all their successors and
assigns.
Collateral.
The word
"Collateral" means all of Grantor's right, title and interest in and to all
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.
Guarantor.
The word
"Guarantor" means any guarantor, surety, or accommodation party of any or all
of
the Indebtedness.
Guaranty.
The word
"Guaranty" means the guaranty from Guarantor 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. Specifically, without
limitation, Indebtedness includes all amounts that may be indirectly secured
by
the Cross-Collateralization provision of this Agreement.
Lender.
The word
"Lender" means THE BANK OF UNION, its successors and assigns.
Note.
The word
"Note" means the Note executed by First Industries Capital Corporation in the
principal amount of $2,800,327.00 dated April 12, 2006, 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.
Property.
The word
"Property" means all of Grantor's right, title and interest in and to all the
Property as described in the "Collateral Description" section of this
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.
7
BORROWER
AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL
PLEDGE AGREMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED APRIL12,
2006.
GRANTOR:
SBL
CORPORATION
By: /s/
Jack E.
Golsen
JACK
E.
GOLSEN, President of SBL Corporation
BORROWER:
FIRST
INDUSTRIES CAPITAL CORPORATION
By: /s/
Jack E. Golsen
JACK
E.
GOLSEN, President of First Industries
Capital
Corporation
LENDER:
THE
BANK
OF UNION
By: /s/
Dustin Curtis
DUSTIN
CURTIS, Asst. Vice President
8
AGREEMENT
This
AGREEMENT (the “Agreement”)
is
dated this November 10, 2006, by and among LSB INDUSTRIES, INC., a Delaware
corporation (the “Company”),
KENT
C. McCARTHY, an individual (“McCarthy”),
JAYHAWK CAPITAL MANAGEMENT, L.L.C., a Delaware limited liability company
(“Jayhawk”),
JAYHAWK INSTITUTIONAL PARTNERS, L.P., a Delaware limited partnership
(“Jayhawk
Institutional”),
and
JAYHAWK INVESTMENTS, L.P., a Delaware limited partnership (“Jayhawk
Investments”).
McCarthy, Jayhawk, Jayhawk Institutional, and Jayhawk Investments are
collectively referred to as the “Jayhawk
Group.”
W
I T
N E S S E T H:
WHEREAS,
the Company’s outstanding $3.25 Convertible Exchangeable Class C Preferred
Stock, Series 2 (the “Series
2 Preferred”),
is
registered with the Securities and Exchange Commission under the Form S-2
Registration Statement No. 33-61640, effective May 19, 1993;
WHEREAS,
Jayhawk Capital, as the investment advisor and manager of Jayhawk Institutional
and the investment advisor and general partner of Jayhawk Investments, is deemed
to beneficially own the securities held by Jayhawk Institutional and Jayhawk
Investments;
WHEREAS,
McCarthy, as the manager and sole member of Jayhawk Capital, has sole voting
and
dispositive power over the Series 2 Preferred owned by Jayhawk Capital, Jayhawk
Institutional and Jayhawk Investments;
WHEREAS,
the Jayhawk Group is the record and beneficial owner of 340,900 shares of Series
2 Preferred, which shares of Series 2 Preferred are owned of record by the
members of the Jayhawk Group, as set forth in the table below:
|
Record
Owner
|
Shares
of
Series
2 Preferred
|
|
Kent
C. McCarthy
|
23,800
|
|
Jayhawk
Institutional Partners, L.P.
|
171,390
|
|
Jayhawk
Investments, L.P.
|
145,710
|
|
Total
|
340,900
|
WHEREAS,
the Jayhawk Group is the record and beneficial owner of 2,837,956 shares of
LSB
common stock, which includes 1,124,700 shares of common stock, 1,475,756 shares
of common stock receivable upon conversion of the 340,900 shares of Series
2
Preferred, 112,500 shares of common stock that may be acquired upon exercise
of
warrants, and 125,000 shares of common stock that may be acquired upon
conversion of $1 million principal amount of the 7% Convertible Senior
Subordinated Debentures due 2011 shares of common stock;
WHEREAS,
as of September 30, 2006, the amount of accrued and unpaid dividends on the
340,900 shares of Series 2 Preferred was $23.2625 per share, resulting in
accrued and unpaid dividends on the shares of Series 2 Preferred owned by the
Jayhawk Group;
WHEREAS,
McCarthy individually, and on behalf of the Jayhawk Group, contacted the Company
and solicited the Company to exchange either directly or as a part of a tender
offer by the Company of its Series 2 Preferred, a portion of the shares of
the
Series 2 Preferred owned by the Jayhawk Group for shares of the Company’s common
stock, par value $.10 per share, based on an exchange rate of 7.4 shares of
the
common stock for each share of Series 2 Preferred surrendered to the Company,
and to waive all right, title and interest that the Jayhawk Group may have
in
and to any and all accrued and unpaid dividends on the Series 2 Preferred so
tendered or exchanged;
WHEREAS,
the Company and the Jayhawk Group desire to amend the Certificate of
Designations, filed with the Delaware Secretary of State of the State of
Delaware on May 21, 1993 (the “Certificate
of Designations”)
that
is included in the Company’ Amended and Restated Certificate of Incorporation,
filed with the Delaware Secretary of State of the State of Delaware on September
2, 1987, as amended prior to the date hereof (including the Certificate of
Designations, the “Charter”),
which
sets forth the rights, preferences and designations of the Series 2 Preferred
to
(a) allow the Company to purchase, redeem or otherwise acquire shares of its
common stock without the approval of the holders of the Series 2 Preferred,
notwithstanding that accrued and unpaid dividends may exist with respect to
the
Series 2 Preferred, and (b) provide that the existing right of the holders
of
Series 2 Preferred to elect two directors to the Company’s Board of Directors
when dividends on the Series 2 Preferred are unpaid may be exercised only if
and
so long as at least 140,000 shares of Series 2 Preferred remain issued and
outstanding; and
WHEREAS,
if the Company undertakes, within one (1) year from the date of this Agreement,
a tender offer for all of the issued and outstanding Series 2 Preferred, with
the consideration to be paid to the holders of Series 2 Preferred that the
tender shares of Series 2 Preferred to be 7.4 shares of the common stock for
each share of Series 2 Preferred tendered, and, in the event of such tender
offer, the Jayhawk Group agrees to tender only 180,450 shares of Series 2
Preferred that it beneficially owns in connection with such tender offer (which
constitutes 0.5293341 percent of the Series 2 Preferred beneficially owned
by
the Jayhawk Group); provided that the Jayhawk Group acknowledge and agree that
the Company, as of the date of this Agreement, has not determined to undertake
any tender offer for the Series 2 Preferred;
NOW,
THEREFORE, in consideration of the terms and conditions contained herein, the
Company and the Holder hereby agree as follows:
1. Amendment
to Charter.
Each member of the Jayhawk Group hereby agrees, whether by written consent
or at
a meeting of the Company’s shareholders held by such purpose, to vote and issue
its consent with respect to all of the shares of common stock and Series 2
Preferred beneficially owned by the Jayhawk Group “for” and in favor of the
adoption and approval to amend the Certificate of Designations included in
the
Charter, substantially as follows (collectively, the “Amendments”):
| (a) |
For
a period of five (5) years from the date of completion of the exchange
or
tender, whichever is applicable, to allow LSB to purchase, redeem
or
otherwise acquire shares of its common stock (including without
limitation, pursuant to the cashless exercise of Company options)
without
the approval of the holders of the Series 2 Preferred, notwithstanding
that accrued and unpaid dividends may exist with respect to the Series
2
Preferred, and
|
| (b) |
to
provide that the existing right of the Series 2 Preferred to elect
two
directors to the Company’s Board of Directors when dividends are unpaid on
the Series 2 Preferred will be effective only if and so long as at
least
140,000 shares of Series 2 Preferred remain issued and
outstanding.
|
Each
member of the Jayhawk Group agrees to (y) execute a written consent as a holder
of Series 2 Preferred and common stock in accordance with the Delaware General
Corporation Law, approving the adoption of the Amendments and (z) to vote “for”
and in favor of the adoption and approval of the Amendments if the Company
determines to hold a meeting of the holders of the Series 2 Preferred and/or
the
common stock to vote upon the Amendments.
2. Exchange/Tender
Offer.
If the Company undertakes, in its sole discretion, within one (1) year from
the
date of this Agreement, (a) a tender offer for its issued and outstanding shares
of Series 2 Preferred or (b) to issue shares of its common stock for a portion
of the Series 2 Preferred owned by the Jayhawk Group pursuant to a private
exchange, each member of the Jayhawk Group, jointly and severally, agrees to
tender or exchange, as applicable, an aggregate total of only 180,450 shares
of
Series 2 Preferred beneficially owned by the Jayhawk Group pursuant to the
terms
of the tender offer or exchange, whichever is undertaken by the Company, and
waive any and all of the Holders’ right, title and interest in and to any and
all accrued and unpaid dividends on the Series 2 Preferred so tendered or
exchanged, subject to the satisfaction of the following:
| (a) |
the
consideration paid by the Company for each share of Series 2 Preferred
so
tendered or exchanged to the Company will be 7.4 shares of common
stock;
|
| (b) |
the
Board of Directors of the Company shall have received an opinion,
in form
satisfactory to the Board of Directors, that the tender offer or
exchange
and the consideration therefore is fair to the shareholders of the
Company;
|
| (c) |
the
common stock to be issued to the holders of the Series 2 Preferred
pursuant to the terms of the tender offer or exchange shall have
been
approved for listing, upon official notice of issuance, with the
American
Stock Exchange (“AMEX”);
|
| (d) |
the
holders of the issued and outstanding shares of common stock of the
Company and the Series 2 Preferred shall have approved the Amendments
and,
if required by the rules and regulations of the AMEX, the holders
of the
issued and outstanding common stock shall have approved the issuance
of
the shares of common stock pursuant to the tender offer or exchange;
and
|
| (e) |
the
Golsen Group (defined as Jack E. Golsen, his spouse and children,
and SBL
Corporation and Golsen Petroleum Corporation, which are entities
controlled by Jack E. Golsen, his wife and children) shall only exchange
or tender in such exchange or tender undertaken by the Company within
one
(1) year from the date of this Agreement 26,467 shares of the Series
2
Preferred beneficially owned by the Golsen Group (which represents
0.5293341 percent of the Series 2 Preferred beneficially owned by
the
Golsen Group) and to waive any and all of the Golsen Group’s right, title
and interest in and to any and all accrued and unpaid dividends on
the
26,467 shares of Series 2 Preferred so tendered or exchanged, subject
to
the conditions set forth in subparagraphs (a) through (d) of this
paragraph 2.
|
3. Miscellaneous
Provisions.
| 3.1 |
Governing
Law; Jurisdiction; Jury Trial.
All questions concerning the construction, validity, enforcement
and
interpretation of this Agreement shall be governed by the internal
laws of
the State of Delaware, without giving effect to any choice of law
or
conflict of law provision or rule (whether of the State of Delaware
or any
other jurisdictions) that would cause the application of the laws
of any
jurisdictions other than the State of Delaware. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
|
| 3.2 |
Counterparts.
This Agreement may be executed in two or more identical counterparts,
all
of which shall be considered one and the same agreement and shall
become
effective when counterparts have been signed by each party and delivered
to the other party; provided
that a facsimile signature shall be considered due execution and
shall be
binding upon the signatory thereto with the same force and effect
as if
the signature were an original, not a facsimile
signature.
|
| 3.3 |
Headings.
The headings of this Agreement are for convenience of reference and
shall
not form part of, or affect the interpretation of, this
Agreement.
|
| 3.4 |
Severability.
If any provision of this Agreement shall be invalid or unenforceable
in
any jurisdiction, such invalidity or unenforceability shall not affect
the
validity or enforceability of the remainder of this Agreement in
that
jurisdiction or the validity or enforceability of any provision of
this
Agreement in any other
jurisdiction.
|
| 3.5 |
Entire
Agreement; Amendments.
This Agreement supersedes all other prior oral or written agreements
between the Jayhawk Group, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein,
and
this Agreement and the instruments referenced herein contain the
entire
understanding of the parties with respect to the matters covered
herein
and therein. No provision of this Agreement may be amended other
than by an instrument in writing signed by the party against whom
the
amendment may be enforced. No provision hereof may be waived other
than by an instrument in writing signed by the party against whom
enforcement is sought.
|
| 3.6 |
Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the
parties and their respective successors and
assigns.
|
| 3.7 |
No
Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their
respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other
person.
|
| 3.8 |
Further
Assurances.
Each party shall do and perform, or cause to be done and performed,
all
such further acts and things, and shall execute and deliver all such
other
agreements, certificates, instruments and documents, as any other
party
may reasonably request in order to carry out the intent and accomplish
the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
|
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
LSB
INDUSTRIES, INC., a Delaware corporation
By: /s/
Jack E. Golsen
Jack
E.
Golsen, Chief Executive Officer
(the
“Company”)
/s/
Kent C. McCarthy
KENT
C.
McCARTHY, an individual
(“McCarthy”)
JAYHAWK
CAPITAL MANAGEMENT, L.L.C.,
a
Delaware limited liability company
By: /s/
Kent C. McCarthy
Name:
Title: President
(“Jayhawk”)
JAYHAWK
INSTITUTIONAL PARTNERS, L.P.,
a
Delaware limited partnership
By: /s/
Kent C. McCarthy
Name:
Title: President
(“Jayhawk
Institutional”)
JAYHAWK
INVESTMENTS, L.P.,
a
Delaware limited partnership.
By: /s/
Kent C. McCarthy
Name:
Title: President
(“Jayhawk
Investments”)
10B5-1
SALES PLAN
This
10B5-1 SALES PLAN (the "Sales Plan") is dated this 5th day of December 2006,
between Jack E. Golsen, an individual ("Seller"), and Capital West Securities,
Inc. ("Broker"). For good and valuable consideration, the receipt of which
is
acknowledged, Seller and Broker hereby agree as follows:
1. Background.
This
Sales Plan is entered into between Seller and Broker for the purpose of
establishing a trading plan that complies with the requirements of Rule
10b5-1(c)(1) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Seller is establishing this Sales Plan in order to permit
the disposition of a portion of Seller's holdings of the common stock, par
value
$0.10 per share (the "Stock"), of LSB Industries, Inc. (the "Issuer"). Seller
desires to engage Broker to effect sales of shares of stock in accordance with
this Sales Plan.
2. Appointment
of Broker; Sales.
Seller
hereby appoints Broker to sell shares of Stock pursuant to the terms and
conditions set forth below. Subject to such terms and conditions, Broker accepts
such appointment.
|
2.1
|
Authorized
Selling.
Commencing, December 6, 2006 (the "Effective Date") and continuing
for a
period of twelve (12) calendar months after the Effective Date (the
"Effective Period"), Broker is authorized and directed, from time
to time
during the Effective Period, to sell up to a maximum of 25,000 shares
of
Stock, at Broker's discretion, on the American Stock Exchange ("AMEX")
at
a price per share at or above $0.15 below market price or $15.00,
whichever is higher, such prices being before deducting any commission,
commission equivalent, mark-up or differential, or other expenses
of
sale.
|
|
2.2
|
Market
Disruptions.
Seller understands that Broker may not be able to effect a sale due
to a
market disruption. If any sale cannot be executed due to a market
disruption, Broker shall effect such sale as promptly as practical
after
the cessation or termination of such market disruption pursuant to
this
Sales Plan.
|
3. Term.
This
Sales Plan is effective on the Effective Date. Broker will cease selling Stock
and the Sales Plan will terminate on the earlier of:
|
(a)
|
December
6, 2007;
|
|
(b)
|
the
completion of the sale of 25,000 shares of Stock pursuant to this
Sales
Plan;
|
|
(c)
|
notice
to Seller or Broker that Seller or Broker is not able to effect the
sale
of Stock under this Sales Plan due to a legal, regulatory or contractual
restriction applicable to Seller or
Broker;
|
|
(d)
|
death
of Seller;
|
|
(e)
|
Seller
or Broker's reasonable determination that the Sales Plan does not
comply
with Rule 10b5-1 or other applicable securities
laws;
|
|
(f)
|
written
notice by Seller or Seller's counsel to Broker informing Broker of
Seller's suspension or termination of the Sales Plan;
or
|
|
(g)
|
written
notice by Broker or Broker's counsel to Seller informing Seller of
Broker's suspension or termination of the Sales
Plan.
|
4. Seller's
Representations, Warranties and Covenants.
|
4.1
|
As
of the date of this Sales Plan, Seller (a) is not aware of material,
nonpublic information with respect to the Issuer or any securities
of the
Issuer (including the Stock), (b) is not subject to any legal, regulatory
or contractual restriction or undertaking that would prevent Broker
from
conducting sales in accordance with this Sales Plan and (c) is entering
into this Sales Plan in good faith and not as part of a plan or scheme
to
evade the prohibitions of Rule 10b5-1 or compliance with the federal
securities laws.
|
|
4.2
|
Seller
shall immediately notify Broker if Seller becomes subject to a legal,
regulatory or contractual restriction or undertaking that would prevent
Broker from making sales pursuant to this Sales
Plan.
|
|
4.3
|
Seller
is currently able to sell shares of Stock in accordance with the
Issuer's
insider trading policies and Seller has obtained the approval of
the
Issuer's counsel to enter into this Sales Plan.
|
|
4.4
|
The
shares of Stock subject to the Sales Plan are free and clear of liens
and
encumbrances of any kind.
|
|
4.5
|
While
the Sales Plan is in effect, Seller will not, directly or indirectly,
(a)
disclose to Broker or any persons affiliated with Broker who is effecting
sales under this Sales Plan any information concerning the Stock
or the
Issuer that might influence the execution of this Sales Plan; or
(b)
engage in offsetting or hedging transactions in violation of Rule
10b5-1.
|
|
4.6
|
Seller
agrees to make all filings, if any, required under Sections 13(d)
and 16
of the Exchange Act.
|
|
4.7
|
Seller
acknowledges and agrees that Seller does not have, and shall not
attempt
to exercise, any influence over how, when, or whether to effect sales
of
Stock pursuant to this Sales Plan.
|
5. Rule
144.
|
5.1
|
Broker
agrees to conduct all sales under this Sales Plan in accordance with
the
manner of sale requirement of Rule 144, if applicable, under the
Securities Act of 1933, as amended (the "Act"), if applicable. If
Rule 144
is applicable, Broker will not effect any sale which would exceed
the then
applicable volume limitation under Rule 144, assuming Broker's sales
under
this Sales Plan are the only sales subject to that limitation. Seller
agrees not to take, and agrees to cause any person or entity with
which
Seller would be required to aggregate sales of Stock pursuant to
paragraph
(a)(2) or (e) of Rule 144 not to take, any action that would cause
the
sales under this Sales Plan not to comply with Rule 144.
|
|
5.2
|
Broker
will be responsible for completing and filing on behalf of Seller
each
required Form 144. Seller hereby grants Broker a power of attorney
to
complete and file on behalf of Seller Forms 144. Seller understands
and
agrees that Broker will make one Form 144 filing at the beginning
of each
three-month period commencing on the Effective Date. Each Form 144
filed
by Broker on behalf of Seller shall (a) state that the sales are
being
effected in accordance with an existing Sales Plan intended to comply
with
Rule 10b5-1, (b) indicate the date the Sales Plan was adopted, and
(c)
state that the representations are made as of such
date.
|
6. Certain
Events.
|
6.1
|
In
the event of a stock split or reverse stock split of the Stock, the
maximum number of shares of Stock to be sold and the minimum price
established above in paragraph 2 will be automatically adjusted
proportionately.
|
|
6.2
|
In
the event of a reincorporation or other corporate reorganization
resulting
in an automatic share-for-share exchange of new shares for the type
of
Stock subject to the Sales Plan, then the new shares will automatically
replace the type of Stock originally specified in the Sales
Plan.
|
7. General.
|
7.1
|
This
Sales Plan is intended to comply with the requirements of Rule
10b5-1(c)(1)(i)(B) under the Exchange Act, and this Sales Plan shall
be
interpreted to comply with the requirements of Rule
10b5-1(c).
|
|
7.2
|
Broker
shall immediately notify Seller if Broker becomes subject to a legal,
regulatory or contractual restriction or undertaking that would prevent
Broker from making sales pursuant to this Sales
Plan.
|
|
7.3
|
This
Sales Plan may be modified or amended only upon the written agreement
of
Seller and Broker.
|
|
7.4
|
This
Sales Plan shall be governed by and construed in accordance with
the laws
of the State of Oklahoma and may be modified or amended only by a
writing
signed by the parties hereto.
|
|
7.5
|
Proceeds
from each sale of Stock effective under this Sales Plan will be delivered
to Seller's Brokerage account, or such other account as directed
in
writing by Seller to Broker.
|
|
7.6
|
This
Sales Plan may be signed in any number of counterparts, each shall
be an
original with the same effect as if all of the signatures were upon
the
same instrument.
|
|
7.7
|
If
any provision of this Sales Plan is or becomes inconsistent with
any
applicable present or future law, rule or regulation, that provision
will
be deemed modified or, if necessary, rescinded in order to comply
with the
relevant law, rule or regulation. All of the provisions of this Sales
Plan
will continue and remain in full force and effect.
|
IN
WITNESS WHEREOF, the undersigned have signed this Sales Plan as of the date
first written above.
/s/
Jack E. Golsen
JACK
E.
GOLSEN
("Seller")
CAPITAL
WEST SECURITIES, INC.
By: /s/
Ann T. Garrett
Name:
Title:
("Broker")