Exhibit 10.2
SECURITY AND COLLATERAL AGENT AGREEMENT
THIS SECURITY AND COLLATERAL AGENT AGREEMENT is made as of January 26,
2005, by Investrust, N.A., a nationally chartered trust company (including any
successor thereto, the "Collateral Agent"), The Xxxxx Company, an Oklahoma
corporation (the "Borrower"), and Xxxxx Technologies, Inc., an Oklahoma
corporation ("BTI"), for the benefit of the holders (the "Note Holders") of
Borrower's 12% Convertible Subordinated Notes due February 15, 2010 (the
"Notes"). All terms used but not otherwise defined in this Agreement have the
same meanings as set forth in the Notes.
The parties agree as follows:
1. Appointment of Collateral Agent. In the Notes each of the Note Holders
appointed Collateral Agent to serve as collateral agent on the terms in this
Agreement and for the benefit of the Note Holders. Collateral Agent accepts this
appointment.
2. Grant of Security Interest.
(a) BTI grants to Collateral Agent, for the benefit of the Note Holders, a
security interest in all equipment of BTI now owned or hereafter acquired and
all additions and accessions thereto (the "Collateral").
(b) This Agreement secures the following (the "Obligations"):
(i) Borrower's obligations under the Notes and this Agreement;
(ii) The repayment of (a) any amounts that Collateral Agent may
advance or spend for the maintenance or preservation of the Collateral and
(b) any other expenditures that Collateral Agent may make under this
Agreement or for the benefit of the Note Holders;
(iii) All amounts owed by Borrower or BTI under any modifications,
renewals, or extensions of any of the foregoing obligations; and
(iv) Any of the foregoing that arise after the filing of a petition by
or against Borrower or BTI under the U.S. Bankruptcy Code, even if the
obligations do not accrue because of the automatic stay under ss. 362 of
the Bankruptcy Code or otherwise.
3. Perfection of Security Interest. BTI authorizes Collateral Agent to
file, and ratifies any filing by the Collateral Agent prior to the execution of
this Agreement of, any financing statements, continuation statements,
certificates, and other documents requested by Collateral Agent to perfect or
renew the security interest created by this Agreement. BTI will execute and
deliver to Collateral Agent financing statements, certificates, and other
documents requested by Collateral Agent to perfect the security interest in any
Collateral now owned or hereafter acquired by Borrower or in any replacements or
proceeds of the Collateral.
4. Termination of Security Interest. The Security Interest shall terminate
upon Borrower's delivery of a certificate (the "Termination Notice") signed by
an officer of Borrower certifying to Collateral Agent that Borrower has obtained
capital (by any combination of USDA-guaranteed financing, bank financing,
additional equity or debt offerings, the proceeds from the Notes, or a sale of
an equity interest in Borrower's subsidiary formed to perform the Pinnacle
Project) in an amount not less than $7,400,000 to finance the pond fines
recovery project in West Virginia for Pinnacle Mining Company, LLC (the
"Pinnacle Project"). Upon delivery of the Termination Notice, this Agreement
shall terminate and Collateral Agent shall cause the secured party of record for
any financing statements filed pursuant to this Agreement to promptly file a
termination statement for any financing statements so filed.
5. Possession. BTI shall have possession of the Collateral, except where
expressly otherwise provided in this Agreement. Where Collateral is in the
possession of a third party, BTI will join with Collateral Agent in notifying
the third party of Collateral Agent's security interest and obtaining an
acknowledgment in an authenticated record from the third party that it is
holding the Collateral for the benefit of Collateral Agent.
6. Covenants Concerning BTI and Collateral.
(a) Inspection. Collateral Agent may inspect the Collateral at any time
upon reasonable notice.
(b) No Disposition. Except as approved in writing by Collateral Agent, BTI
shall not sell, transfer, lease, or otherwise dispose of any item of Collateral,
other than replacing such items in the ordinary course of business, or grant any
other security interest in any of the Collateral.
(c) Risk of Loss and Insurance. BTI has the risk of loss of the Collateral.
Collateral Agent is not responsible for any injury to, loss to, or loss in value
of the Collateral. BTI will continuously maintain insurance on the Collateral
with types and amounts of coverages no less than the lesser of (a) the types and
amounts as of the execution of this Agreement, and (b) such types and amounts as
are usual and customary in BTI's industry, with Collateral Agent named as loss
payee and as an additional insured. BTI will, upon request by Collateral Agent,
deliver to Collateral Agent certificates evidencing such coverage and evidence
of the payment of all premiums.
(d) Maintenance. BTI will maintain the Collateral in operating condition,
ordinary wear and tear and casualty excepted.
(e) Taxes. BTI will pay before delinquency any tax or other governmental
charge on the Collateral.
(f) Existence. BTI shall preserve its corporate existence and not, in one
transaction or a series of related transactions, merge into or consolidate with
any other entity or sell all or substantially all of its assets. BTI shall not
change the state of its incorporation and shall not change its corporate name
without providing Collateral Agent with 30 days prior notice.
(g) Personal Property. BTI will not affix any Collateral to any real
property in any manner that would change the nature of the property from that of
personal property.
(h) Liens. BTI will not create, incur or permit to exist on the Collateral
any security interest, mortgage, pledge, lien, claim, charge, or encumbrance,
whether statutory, consensual, or otherwise (collectively, "Liens") and shall
defend the Collateral and Collateral Agent's first priority security interest in
the Collateral against the claims of all other persons.
(i) Use. BTI shall use the Collateral and operate its business in
compliance with all applicable laws, regulations, and ordinances.
7. BTI's Representations and Warranties. BTI represents and warrants to
Collateral Agent that:
(a) Title. BTI owns the Collateral free and clear of all Liens. There is no
financing statement covering or purporting to cover any interest of BTI in the
Collateral filed in any jurisdiction.
(b) State of Organization and Name. BTI is and has always been a
corporation organized and in good standing under the laws of the State of
Oklahoma. BTI's exact legal name is as stated in the introductory paragraph of
this Agreement. Prior to April 1994, BTI's legal name was White Eagle, Inc.
Since April 1994 BTI has never had or done business under any name other than
its current name.
(c) Company Authorization. The execution, delivery, and performance by BTI
of this Agreement are within BTI's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental authority, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of BTI or of any judgment, injunction,
order, or decree or any indenture, mortgage, deed of trust, credit agreement, or
loan agreement, or any other material agreement or material instrument binding
upon BTI, or result in the creation or imposition of any Lien on any of the
Collateral.
(d) Litigation. There is no action, suit, or proceeding pending against, or
to the knowledge of BTI threatened against or affecting, BTI before any court or
arbitrator or any governmental authority.
(e) Collateral. All of the Collateral is and will be in operating condition
and not subject to any licensing, patent, royalty, trademark, trade name, or
copyright agreements with any third parties or any infringement claims, and the
use, sale, or other disposition of any of the Inventory by Collateral Agent
after an Event of Default shall not require the consent of any person and shall
not constitute a breach or default under any contract or agreement to which BTI
is a party or to which any of the Collateral is subject.
8. Default. BTI will be in default under this Agreement if any of the
following (each an "Event of Default") occurs:
(a) Default under Notes. Any Event of Default by Borrower under the Notes;
(b) Unauthorized Transfer. BTI fails to perform any obligation under this
Agreement or any of BTI's representations or warranties in this Agreement are or
become inaccurate in any respect and such default or inaccuracy continues after
[30] days notice from Collateral Agent;
(c) Attachment. Any of the Collateral becomes subject to attachment,
execution or levy;
(d) Bankruptcy. Borrower or BTI voluntarily files a petition for bankruptcy
or reorganization; a petition in bankruptcy is filed against Borrower or BTI; a
receiver or other representative is appointed for Borrower or BTI or its
business or assets; or Borrower or BTI makes an assignment for the benefit of
its creditors; and
(e) Evidence of Lack of Priority. Collateral Agent's security interest in
the Collateral is or becomes not prior to all other security interests.
9. Remedies Upon Event of Default. Upon the written demand by Note Holders
holding a majority of the aggregate outstanding principal amounts of the Notes
(the "Majority Holders"), upon an Event of Default:
9.1 General. Collateral Agent may preserve any remedy at law (including
those available to secured parties under the Uniform Commercial Code) or in
equity to collect, enforce, or satisfy any obligations.
9.2 Specific. Collateral Agent may pursue any of the following remedies
separately, successively, or simultaneously:
(a) File suit and obtain judgment and, in conjunction with any action, seek
any ancillary remedies provided by law, including levy of attachment and
garnishment.
(b) Take possession of any Collateral if not already in its possession
without demand and without legal process. Upon Collateral Agent's demand, BTI
shall assemble and make the Collateral available to Collateral Agent as it
directs. BTI grants to Collateral Agent the right to enter into or on any
premises where Collateral may be located.
(c) Without taking possession, sell, lease or otherwise dispose of the
Collateral at any public or private sale in accordance with the Uniform
Commercial Code.
10. Foreclosure Procedures.
10.1 No Waiver. No delay or omission by Collateral Agent to exercise any
right or remedy accruing upon any event of default shall impair any right or
remedy, waive any default or operate as an acquiescence to any Event of Default,
or affect any subsequent Event of Default of the same or a different nature.
10.2 Notices. Collateral Agent shall give BTI such notice of any private or
public sale as may be required by the Uniform Commercial Code.
10.3 Condition of Collateral. Collateral Agent has no obligation to clean
up or otherwise prepare the Collateral for sale.
10.4 No Obligation to Pursue Others. Collateral Agent has no obligation to
attempt to satisfy the Obligations by collecting them from any other person
liable for them. Collateral Agent may release, modify, or waive any Collateral
provided by any other person to secure any of the Obligations, all without
affecting Collateral Agent's rights against BTI or Borrower. Borrower and BTI
waive any right they may have to require Collateral Agent to pursue any third
person for any of the Obligations.
10.5 Compliance with Other Laws. Collateral Agent may comply with any
applicable state or federal law requirements in connection with the disposition
of the Collateral and compliance shall not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.
10.6 Warranties. Collateral Agent may sell the Collateral without giving
any warranties as to the Collateral. Collateral Agent may specifically disclaim
any warranties of title or the like. This procedure shall not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral.
10.7 No Marshaling. Collateral Agent shall have no obligation to marshal
any assets in favor of BTI or against or in payment of the Notes, any of the
other Obligations, or any other obligation owed to Collateral Agent or the Note
Holders by Borrower, BTI, or any other person.
11. Limitation on Note Holders' Action Against Borrower. Until termination
of the security interest in the Collateral, Collateral Agent shall have the
exclusive authority to enforce this Agreement and the Notes on behalf of the
Note Holders, and no Note Holder may take any action against Borrower, BTI, or
the Collateral with respect to the Obligations under the Notes, including,
without limitation, sending notices of defaults or events of default,
instituting legal proceedings, and exercising any right of set-off or
counterclaim.
12. Duties and Obligations of Collateral Agent.
12.1 Performance. In performing its duties, Collateral Agent shall exercise
the same care and skill as it would exercise in dealing with loans for its own
account. Neither Collateral Agent nor any of its directors, officers, employees
or other agents shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or the Notes except for
its or their own gross negligence or willful misconduct, as finally determined
by a court of competent jurisdiction. Without limiting the generality of the
foregoing, Collateral Agent: (a) may consult with legal counsel and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith and in accordance with the advice of counsel or
such experts; (b) makes no representation or warranty to any Note Holder as to,
and shall not be responsible to any Note Holder for, any recital, statement,
representation or warranty made in or in connection with this Agreement, any
Notes or in any written or oral statement (including a financial or other such
statement), instrument or other document delivered in connection herewith or
therewith or furnished to any Note Holder by or on behalf of Borrower or BTI;
(c) shall have no duty to ascertain or inquire into the performance or
observance by Borrower or BTI of any of the covenants or conditions in this
Agreement or to inspect any of the Collateral or other property (including the
books and records) of Borrower or BTI or inquire into the use of the proceeds of
the Notes or to inquire into the existence or possible existence of any Event of
Default; (d) shall not be responsible for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency, collectibility or value
of this Agreement or the Notes or any instrument or document executed or issued
pursuant hereto or in connection herewith, except to the extent that such may be
dependent on the due authorization and execution by Collateral Agent itself; (e)
shall have no duty or responsibility, either initially or on a continuing basis,
to provide to any Note Holder any credit or other information with respect to
Borrower or BTI; (f) shall be entitled to rely and act upon, any notice,
consent, certificate or other instrument or writing (which may be by facsimile
or other electronic means) believed by it to be genuine and correct and to have
been signed or sent by the proper party or parties; (g) may execute or file any
and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to this Agreement or any of the Notes; and (h) may
perform, exercise, and enforce any and all other rights and remedies of the Note
Holders with respect to the Notes, the Obligations, this Agreement, or otherwise
related to any of same to the extent reasonably incidental to the exercise by
the Collateral Agent of the rights and remedies specifically authorized to be
exercised by the Collateral Agent by the terms of this Agreement or any of the
Notes. As to any matters not expressly provided for by this Agreement and the
Notes (including, without limitation, enforcement or collection of the
Obligations), Collateral Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Holders. Instructions of the Majority Holders shall
be binding upon all Note Holders. Collateral Agent shall not be required to take
any action that, in the reasonable opinion of the Collateral Agent, exposes the
Collateral Agent to liability or that is contrary to this Agreement, the Notes,
or applicable law.
12.2 Apportionment of Collections. After the occurrence and during the
existence of any Event of Default, Collateral Agent shall apply and disburse all
collections of the Obligations and proceeds of the Collateral in the following
order: (a) first, to amounts due to Collateral Agent under this Agreement,
including, without limitation, Collateral Agent Advances, until they are paid in
full; and (b) second, to each Note Holder, pro rata on the basis of the ratio of
the outstanding principal amounts under its Note to the total principal amount
outstanding under all of the Notes.
13. Fees and Expenses of Collateral Agent.
13.1 Collateral Advances. Collateral Agent may from time to time make such
disbursements and advances ("Collateral Agent Advances") that Collateral Agent,
in its sole discretion, deems necessary or desirable to preserve, protect,
prepare for sale or lease or dispose of the Collateral or protect or enforce the
security interest in the Collateral. Collateral Agent Advances shall bear
interest at the highest rate set forth in the Note and shall be payable on
demand. Collateral Agent shall notify each Note Holder, and the Borrower in
writing of each such Collateral Agent Advance. Each notice shall include a
description of the purpose of the Collateral Agent Advance. Borrower and BTI
shall upon demand reimburse Collateral Agent for each Collateral Agent Advance
and pay the interest accrued thereon.
13.2 Indemnification. Borrower and BTI shall indemnify and hold harmless
Collateral Agent and its directors, officers, agents and employees against any
and all claims, damages, losses, liabilities, or expenses (including, but not
limited to, reasonable attorneys' fees, court costs, and costs of investigation)
of any kind or nature whatsoever arising out of or in connection with this.
13.3 Survival. The obligations of Borrower and BTI to reimburse and pay
interest on Collateral Advances and to indemnify Collateral Agent shall survive
the termination of the security interest and this Agreement and the earlier
resignation or removal of Collateral Agent. When Collateral Agent incurs
expenses or renders services in connection with proceedings under the U.S.
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency
or other similar law, or in case of any other comparable judicial proceedings
relative to Borrower or BTI, such expenses (including the fees and expenses of
Collateral Agent's counsel and agents) and the compensation for such services
are intended to constitute expenses of administration under any bankruptcy law
or law relating to creditors rights generally.
14. Resignation by and Removal of Collateral Agent; Successor Collateral
Agent.
(a) Collateral Agent may at any time resign and terminate its obligations
under this Agreement upon at least 60 days prior written notice to Borrower. No
resignation shall be effective until a successor Collateral Agent shall have
been appointed and accepted its appointment. Promptly after receipt of notice of
Collateral Agent's proposed resignation, Borrower shall appoint, by written
instrument, a successor Collateral Agent and notify the Note Holders thereof. If
a successor Collateral Agent is not appointed in accordance with the foregoing
procedures, Collateral Agent may petition a court of competent jurisdiction to
appoint a successor Collateral Agent. One original counterpart of such
instrument of appointment shall be delivered to each of Collateral Agent,
Borrower, BTI, and the successor Collateral Agent.
(b) The Majority Holders, upon at least 60 days written notice to
Collateral Agent may remove and discharge Collateral Agent (or any successor
Collateral Agent thereafter appointed) from the performance of its obligations
under this Agreement. Promptly after the giving of notice of removal of
Collateral Agent, the Majority Holders shall appoint, by written instrument, a
successor Collateral Agent and notify the Note Holders thereof. One original
counterpart of the instrument of appointment shall be delivered to the
Collateral Agent, Borrower, BTI, the Note Holders, and the successor Collateral
Agent. The removal shall become effective until all outstanding amounts due and
owing to Collateral Agent are paid in full.
(c) In the event of any such resignation or removal, Collateral Agent shall
cooperate with Borrower and the successor Collateral Agent to facilitate the
continued perfection and priority of the security interest in the Collateral.
15. Limitations of Liability.
(a) Collateral Agent shall not be liable to Borrower, BTI, any Note Holder,
or any other person with respect to any action taken or not taken by Collateral
Agent in good faith in the performance of its obligations under this Agreement.
The obligations of Collateral Agent shall be determined solely by the express
provisions of this Agreement. No representation, warranty, covenant, agreement,
obligation or duty of Collateral Agent shall be implied with respect to this
Agreement or Collateral Agent's services hereunder.
(b) Collateral Agent may conclusively rely, and shall be fully protected in
acting or refraining from acting, upon and need not verify the accuracy of any
written instruction, notice, order, request, direction, certificate, opinion or
other instrument or document believed by Collateral Agent to be genuine and to
have been signed and presented by the proper party or parties.
(c) No provision of this Agreement shall require Collateral Agent to expend
or risk its own funds or otherwise incur financial liability in the performance
of its duties under this Agreement if Collateral Agent has reasonable grounds
for believing that repayment or adequate indemnity is not assured.
(d) Collateral Agent may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees appointed with due care, and shall not be responsible for
any willful misconduct or negligence on the part of any agent, attorney,
custodian or nominee so appointed.
16. Notices. All demands, notices and communications relating to this
Agreement shall be in writing and shall be deemed to have been duly given when
received by the other party at the addresses shown below whether by personal
delivery, express delivery or facsimile, or such other address as may hereafter
be furnished to the other party or parties by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee.
If to Borrower:
The Xxxxx Company
0000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxx Xxx, Xx.
If to Collateral Agent:
Investrust, N.A.
Attn: C.A Xxxxxxx
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
If to Note Holders:
To the addresses specified by each Note Holder in the
Subscription Agreement executed by each Note Holder
subscribing for the Notes.
17. Governing Law; Venue; Consent to Jurisdiction.
(a) The laws of the State of Oklahoma, without giving effect to its choice
of law principles, shall govern all matters arising under or relating to this
Agreement.
(b) The parties agree that any legal proceeding arising out of this
Agreement or the transactions contemplated hereby, including any legal
proceeding by a third party beneficiary to this Agreement, may be brought and
litigated only in the United States District Court for the Western District of
Oklahoma, to the extent that it has subject matter jurisdiction and otherwise in
the state courts sitting in Oklahoma City, Oklahoma, and each party hereto
agrees and consents to such jurisdiction. The parties agree that service of
process may be made upon them in any legal proceeding relating to this Agreement
by any means allowed under Oklahoma or federal law. The parties hereby waive and
agree not to assert, by way of motion, as a defense or otherwise, that any
proceeding is brought in an inconvenient forum or that the venue thereof is
improper, and further agree to a transfer of any such proceeding to the United
States District Court for the Western District of Oklahoma, to the extent that
it has subject matter jurisdiction, and otherwise in the state courts sitting in
Oklahoma City, Oklahoma.
18. Final Agreement; Amendment. This is the final expression of the entire
agreement of the parties regarding the subject matter of this Agreement. The
parties may amend this Agreement only by a written agreement that identifies
itself as an amendment to this Agreement. Collateral Agent and the Note Holders
may amend this Agreement with respect to their duties and obligations to each
other without the consent of Borrower or BTI.
EXECUTED as of the day and year first written above.
BTI: XXXXX TECHNOLOGIES, INC., an Oklahoma
corporation
/s/ Xxxx Xxx, Xx.
By: ----------------------------------------
Xxxx Xxx, Xx., Vice President
BORROWER: THE XXXXX COMPANY, an Oklahoma corporation
/s/ Xxxx Xxx, Xx.
By: ----------------------------------------
Xxxx Xxx, Xx., President
COLLATERAL AGENT: INVESTRUST, N.A., a nationally chartered trust
company
/s/ C. A. Xxxxxxx
By: ----------------------------------------
C. A. Xxxxxxx, Vice President
