Xxx. 00-00
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this Agreement) is made and
entered into as of the 6th day of November, 1997, by and between American
Physicians Service Group, Inc., a Texas corporation (the Secured Party) and
Consolidated Eco-Systems, Inc., an Idaho corporation formerly known as Exsorbet
Industries, Inc. (the Debtor).
RECITALS:
A. Debtor executed and delivered that certain Promissory Note dated November 26,
1996 (the Original Note) in the original principal amount of Three Million Three
Hundred Thousand Dollars ($3,300,000) payable to the order of Secured Party.
B. The Original Note was secured pursuant to the following agreements, all for
the benefit of Secured Party: (i) that certain Security Agreement dated December
12, 1996, entered into by7-7, Inc., an Arkansas corporation (7-7), formerly
known as 7-7 Merger, Inc.; (ii) that certain Security Agreement dated September
30, 1996, entered into by 77; (iii) that certain Assignment and Security
Agreement dated September 30, 1996, entered into by Debtor; and (iv) those
certain Guaranty Agreements dated September 30, 1996, entered into by each of
the following entities:
a. Consolidated Environmental Services, Inc., an Arkansas
corporation (CES);
b. Cierra, Inc., an Arkansas corporation (Cierra);
x. Xxxxx Environmental Services, Inc., a Louisiana corporation
(Larco);
d. KR Industrial Services of Alabama, Inc., an Alabama corporation
(KR Industrial);
e. Exsorbet Technical Services, Inc., an Arkansas corporation
(Exsorbet Technical) doing business as SpilTech Services,
Inc.;
f. Eco Acquisition, Inc., an Arkansas corporation (Acquisition),
also known as Eco-Systems, Inc.; and
g. 7-7
(all of the agreements described in (i) through (iv) above are collectively
referred to herein as the Original Security Documents).
C. Debtor has executed and delivered a new note of even date herewith, payable
to the order of Secured Party, in the original principal amount of $3,788,580
(the New Note) in renewal and extension of the Original Note, which New Note is
also secured pursuant to (i) the Original Security Documents, and (ii) that
certain Security Agreement of even date herewith entered into for the benefit of
Secured Party by Larco (the Larco Security Agreement) (the agreements described
in (i) and (ii) of this sentence, together with the Refinancing Agreement
described below and this Agreement, are collectively referred to herein as the
Security Documents).
D. Secured Party has requested that Debtor pledge the Collateral (as defined
below) to secure certain obligations and liabilities, including without
limitation (i) Debtors obligation to pay to Secured Party the New Note, (ii)
Debtors performance of the covenants set forth in the Security Documents, (iii)
Debtors and Debtors Subsidiaries (as hereinafter defined) performance of the
covenants set forth in that certain Master Refinancing Agreement of even date
herewith entered into for the benefit of Secured Party by Debtor and Debtors
Subsidiaries (as hereinafter defined) (the Refinancing Agreement), and (iv)
Debtors performance of the covenants more fully set forth herein.
E. Reference is hereby made to Schedule I, attached hereto and
incorporated herein by reference, for certain defined terms used in this
Agreement.
AGREEMENT:
Now, Therefore, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor acknowledges, Debtor and Secured Party
agree as follows:
ARTICLE I
COLLATERAL AND SECURED OBLIGATIONS
1.1 GRANT OF SECURITY INTEREST. Debtor hereby assigns, transfers, and pledges to
Secured Party, and Debtor hereby grants to Secured Party a security interest in,
the following described collateral (collectively, the Collateral):
(a) SHARES OF ACQUISITION AND LARCO. All issued and outstanding shares
of common stock of Acquisition and Larco, including without limitation those
shares evidenced by the certificates described in Schedule II attached hereto
and incorporated herein, and any replacements, substitutions, or exchanges of
such certificates; and any additional shares of common stock of Acquisition or
Larco subsequently delivered or issued to Secured Party (the above described
stock is sometimes collectively referred to as the Subsidiary Shares); and any
options, rescission rights, registration rights, conversion rights, subscription
rights, contractual or quasicontractual rights, warrants, redemption rights,
redemption proceeds, calls, preemptive rights and all other rights and benefits
pertaining to the Subsidiary Shares;
(b) SHARES OF DEBTOR. 1,200,000 shares of the $.001 par value
per share common stock of Consolidated (the Consolidated Shares), such
Consolidated Shares being those certain shares of common stock of Consolidated
purchased by Consolidated from Secured Party in November, 1996, for $3,300,000,
and any replacements, substitutions, or exchanges of such certificates; and any
options, rescission rights, registration rights, conversion rights, subscription
rights, contractual or quasicontrac rights, warrants, redemption rights,
redemption rights, redemption proceeds, calls, preemptive rights and all other
rights and benefits pertaining to the Consolidated Shares (the Subsidiary Shares
and the Consolidated Shares are sometimes collectively referred to as the
Shares);
(c) ACCOUNTS. All accounts and rights now or hereafter attributable to
any of the Collateral described in (a) or (b) above, and all rights of Debtor
now or hereafter arising under any agreement pertaining to the Collateral
described in (a) or (b) above, including without limitation all distributions,
proceeds, fees, dividends, preferences, payments or other benefits of whatever
nature which Debtor are now or may hereafter become entitled to receive with
respect to any Collateral described in (a) or (b) above; and
(d) ADDITIONAL PROPERTY. Collateral shall also include the
following property (collectively, the Additional Property) which Debtor becomes
entitled to receive or shall receive in connection with any other Collateral:
(i) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion, sale of
assets, combination of shares, stock split, reverse stock split or spinoff; (ii)
any option, warrant, subscription or right, whether as an addition to or in
substitution of any other Collateral; (iii) any dividends or distributions of
any kind whatsoever, whether distributable in cash, stock or other property;
(iv) any interest, premium or principal payments; and (v) any conversion or
redemption proceeds.
(e) PROCEEDS. All proceeds (cash and noncash) arising out of the
sale, exchange, collection or other disposition of all or any portion of the
Collateral described in (a), (b), (c), or (d) above, including without
limitation proceeds in the form of stock, accounts, chattel paper, instruments,
documents, goods, inventory and equipment.
The security interest in the Collateral hereby granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the Security Interest.
1.2 OBLIGATIONS. This Agreement and the Security Interest shall secure
full and punctual payment and performance of the following indebtedness, duties
and obligations (the Obligations):
(a) All covenants, obligations, and liabilities of Debtor
and Debtors Subsidiaries to Secured Party under the Security Documents;
(b) All principal, interest, fees and other amounts payable to
the Secured Party pursuant to the New Note, including all future advances,
extensions, renewals, modifications, increases, or substitutions thereof;
(c) All liabilities and obligations of Debtor to Secured Party
under and pursuant to this Agreement and/or any other contract or agreement
between Secured Party and Debtor or between Secured Party and any Subsidiary or
affiliate of Debtor; and
(d) (i)all indebtedness, obligations and liabilities of Debtor
and/or Debtors Subsidiaries and affiliates to Secured Party of any kind or
character, now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several, arising from, connected with, or related to the Security Documents,
the New Note, or any other document, agreement, or instrument executed in
connection therewith, (ii)all accr but unpaid interest on any of the
indebtedness described in (i)above, (iii)all obligations of Debtor and/or
Debtors Subsidiaries and affiliates to Secured Party under any documents
evidencing, securing, governing and/or pertaining to all or any part of the
indebtedness described in (i) and (ii) above, (iv)all costs and expenses
incurred by Secured Party in connection with the collection and administration
of all or any part of the indebtedness and obligations described in (i), (ii)
and (iii) above or the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and obligations,
including without limitation all reasonable attorneys fees, and (v)all renewals,
extensions, modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.
(e) All sums expended or advanced by Secured Party pursuant to
any term or provision of this Agreement (i) to collect and/or enforce the
Obligations, (ii) to maintain, protect and preserve the Collateral, and (iii)
all other sums now or hereafter loaned or advanced by Secured Party to Debtor,
or expended by Secured Party for the account of Debtor or otherwise owing by
Debtor to Secured Party, in respect to the Obligations.
1.3 VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities pledged
as Collateral may be exercised by Debtor; provided, however, that Debtor will
not exercise, or cause to be exercised, any such voting rights, without the
prior written consent of Secured Party, if the direct or indirect effect of such
vote will result in an Event of Default hereunder
ARTICLE II
DEBTORS REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL
Debtor hereby represents and warrants to Secured Party as follows:
2.1 OWNERSHIP OF COLLATERAL. Debtor has good and marketable title to the
Collateral free and clear of any liens, security interests, shareholders
agreement, calls, charge, or encumbrance, except for this Security Interest. No
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except as may have
been filed in favor of Secured Party relating to this Agreement.
2.2 POWER & AUTHORITY.Debtor has the lawful right, power, and authority to grant
the Security Interest in the Collateral. This Agreement, together with all
filings and other actions necessary or desirable to perfect and protect such
security interest, which have been duly taken, create a valid and perfected
first priority security interest in the Collateral securing the payment and
performance of the Obligations.
2.3 NO AGREEMENTS. The Shares are not subject to any right of redemption by
Acquisition, Larco, or Consolidated, as applicable, or any call or put options,
voting trust, proxy, shareholders agreement, right of first refusal or any
provision of the articles of incorporation or bylaws of Acquisition, Larco, or
Debtor, as applicable, or any other document or agreement which would in any way
impair or adversely affect this Security Interest or the rights of Secured Party
under this Agreement.
2.4 LOCATION. Debtors principal place of business and chief executive office are
located at 0000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, 00000. The office where
the records concerning the Collateral are kept is located at Debtors principal
place of business.
2.5 SOLVENCY OF DEBTOR AND THE SUBSIDIARIES. As of the date hereof, and after
giving effect to this Agreement, the Security Documents and the New Note, and
the completion of all other transactions contemplated by Debtor and the
Subsidiaries at the time of the execution of this Agreement and the New Note,
(i) Debtor and each Subsidiary (other than Cierra, CES and 77) is and will be
solvent, (ii) the fair saleable value of Debtors assets exceeds and will
continue to exceed Debtor's liabilities (both fixed and contingent), and (iii)
Debtor has and will have sufficient capital to carry on Debtors businesses and
all businesses in which Debtor is about to engage.
2.6 SECURITIES. Any certificates evidencing securities pledged as Collateral are
valid and genuine and have not been altered. All securities pledged as
Collateral have been duly authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of the preemptive rights of any
party or of any agreement by which Debtor or the issuer thereof is bound. No
restrictions or conditions exist with respect to the transfer or voting of any
securities pledged as Collateral. Debtor owns all of the issued and outstanding
stock, of all classes, of Acquisition and Larco, and there are no outstanding
stock rights, rights to subscribe, options, warrants or convertible securities
outstanding or any other rights outstanding entitling any party, including
Debtor, to obtain (through conversion or otherwise) any capital stock, of any
class, of Acquisition or Larco. All issued and outstanding shares of common
stock of Acquisition and Larco are evidenced by the certificates described in
Schedule II attached hereto.
2.7 OWNERSHIP OF SHARES. Debtor is, as of the date hereof, the legal and
beneficial owner of the Shares, and Debtor has paid the full purchase price or
other consideration for the Shares on the date hereof.
2.8 SUBSIDIARY SHARES ISSUED AND PAID. All of the Subsidiary Shares are validly
issued and outstanding shares of capital stock of Acquisition and Larco, as
applicable, and are fully paid and nonassessable.
2.9 CONSOLIDATED SHARES ISSUED. All of the Consolidated Shares are validly
issued to Debtor, and since being purchased by Debtor, have been held by Debtor
and reflected on its books and in all filings with the Securities Exchange
Commission and other regulatory bodies, as treasury shares, and have not been
retired or otherwise transferred to the status of unissued shares.
ARTICLE III
DEBTORS OTHER REPRESENTATIONS AND WARRANTIES
3.1 GOODSTANDING - DEBTOR. Debtor is a duly formed Idaho corporation,
duly organized and in good standing under the laws of Idaho, qualified to do
business in and in good standing in each state or country in which such
qualification is necessary for the conduct of its business, and has the power to
own its property and to carry on its business in each jurisdiction in which
Debtor operates.
3.2 GOODSTANDING - SUBSIDIARIES. Each Subsidiary (as more fully
described below) is a duly formed corporation under the laws of the state of its
incorporation, duly organized and in good standing under the laws of the state
of its incorporation, qualified to do business in and in good standing in each
state or country in which such qualification is necessary for the conduct of its
business, and has the power to own its property and to carry on its business in
each jurisdiction in which it operates. As of the date hereof, the Subsidiaries
constitute all the subsidiaries of Debtor which generate revenue and/or own any
assets and/or engage in any business activities.
3.3 AUTHORITY AND COMPLIANCE.Debtor has full power and authority toenter
into this Agreement. Debtor and Debtors Subsidiaries, where applicable, have
full power and authority to enter into and perform their obligations under the
New Note, the Refinancing Agreement, and all other Security Documents governed
by this Agreement and the Refinancing Agreement, all of which have been duly
authorized by all proper and necessary corporate action. No further consent or
approval is required as a condition to the validity of this Agreement, the New
Note, or any other Security Documents. Debtor and each Subsidiary is in
compliance with all Laws to which it is subject.
3.4 BINDING AGREEMENT. This Agreement, the Security Documents, and the New Note
constitute valid and legally binding obligations of Debtor and, where
applicable, the Subsidiaries, in accordance with their terms, subject to the
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally.
3.5 LITIGATION. There are no proceedings pending or, to the knowledge of Debtor,
threatened before any court or administrative agency which will or may have a
material adverse effect on the financial condition or operations of Debtor or
any Subsidiary or upon Debtors or any Subsidiarys ability to perform its
obligations under the New Note, this Agreement, or the Security Documents.
3.6 NO CONFLICTING AGREEMENTS.There are no charter, bylaw or stock provisions of
Debtor and no provisions of any existing agreement, mortgage, indenture or
contract binding on Debtor or affecting its property, which would conflict with
or in any way prevent the execution, delivery, or carrying out of the terms of
the New Note, this Agreement or the Security Documents. There are no charter,
bylaw or stock provisions of any Subsidiary and no provisions of any existing
agreement, mortgage, indenture or contract binding on any Subsidiary or
affecting its property, which would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of any of the Security
Documents to which such Subsidiary is a party.
3.7 OWNERSHIP OF ASSETS.Debtor has good and full title to the Collateral,and the
Collateral is owned free and clear of liens, charges, claims, security
interests, and other encumbrances. Debtor will at all times maintain its
tangible property, real and personal, in good order and repair taking into
consideration reasonable wear and tear.
3.8 TAXES. Debtor and each Subsidiary has filed all tax returns required to be
filed and has paid taxes shown thereon to be due, including interest and
penalties, except such taxes, if any, as are being contested in good faith and
as to which adequate reserves have been provided. The charges, accruals, and
reserves on the books of Debtor or the Subsidiary in respect of any taxes or
other governmental charges are, in the opinion of Debtor and such Subsidiary,
adequate.
3.9 FINANCIAL STATEMENTS. The books and records of Debtor properly reflect
Debtor's financial condition, and the financial statements of Debtor submitted
to Secured Party properly reflect Debtor's financial condition as of such date
and were prepared in accordance with generally accepted accounting principles,
consistently applied.
3.10 ERISA PLAN. No Reportable Event or Prohibited
Transaction (as those terms are defined by erisa) has occurred with respect to
any employee benefit plan of Debtor or any Subsidiary which is subject to erisa.
Neither Debtor nor any Subsidiary has incurred any material accumulated unfunded
deficiency within the meaning of erisa, and neither Debtor nor any Subsidiary
has incurred any material liability to the Pension Benefit Guaranty Corporation
established under erisa (or any successor thereto under erisa) in connection
with any such benefit plan.
ARTICLE IV
DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL
Debtor covenants and agrees that from the date hereof and until the
payment and performance in full of the Obligations unless Secured Party
otherwise consents in writing:
4.1 DELIVERY OF INSTRUMENTS AND/OR CERTIFICATES. Contemporaneously
herewith, Debtor covenants and agrees to deliver to Secured Party any
certificates, documents, or instruments representing or evidencing the
Collateral, with Debtors endorsement thereon and/or accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.
4.2 FURTHER ASSURANCES - All Shares. Debtor will contemporaneously with
the execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Secured
Party to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party;
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities; (D) delivering notice
of Secured Partys security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured Party;
and (E) obtaining written confirmation of the pledge of any securities
constituting Collateral from any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and substance
satisfactory to Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United States, Debtor
covenants and agrees, at Secured Partys request, to cooperate in registering
such securities in Secured Partys name or with Secured Partys account maintained
with a Federal Reserve Bank.
4.3 FURTHER ASSURANCES - CONSOLIDATED SHARES. Contemporaneously
herewith, Debtor covenants and agrees to issue and deliver (unless already
issued and delivered) to Secured Party a stock certificate evidencing the
Consolidated Shares, with Debtors endorsement thereon, in form and substance
satisfactory to Secured Party. Debtor further covenants and agrees that it will,
at all times, except as may be consented to otherwise in writing by Secured
Party in connection with any registration and sale of the Consolidated Shares
for the benefit of Secured Party, maintain the Consolidated Shares as issued
treasury shares, and will not retire or otherwise transfer the Consolidated
Shares, on its books or to any third party.
4.4 ADDITIONAL PROPERTY. All Additional Property received by Debtor
shall be received in trust for the benefit of Secured Party. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Debtor, together with such instruments of transfer as Secured Party may request,
shall immediately be delivered to or deposited with Secured Party and held by
Secured Party as Collateral under the terms of this Agreement. If the Additional
Property received by Debtor shall be shares of stock or other securities, such
shares of stock or other securities shall be duly endorsed in blank or
accompanied by proper instruments of transfer and assignment duly executed in
blank with, if requested by Secured Party, signatures guaranteed by a member or
member organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Party.
Secured Party shall be deemed to have possession of any Collateral in transit to
Secured Party or its agent.
4.5 SALE, TRANSFER, ENCUMBRANCE. Debtor will not sell, transfer,
mortgage, or otherwise encumber any Collateral or impair the value thereof in
any manner without Secured Partys prior written consent, including without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption or guarantee of indebtedness or other lending of credit. Secured
Partys written consent to any sale, mortgage, transfer, or encumbrance shall not
be construed to be a waiver of this provision in respect to any subsequent
proposed sale, mortgage, transfer, or encumbrance.
4.6 LIENS. Neither Debtor nor any person acting on Debtors behalf has,
or shall have any right, power, or authority to and shall not create, incur, or
permit to be placed or imposed, upon the Collateral, any lien of any type or
nature whatsoever, other than the liens in favor of Secured Party.
4.7 MATTERS OR OCCURRENCES AFFECTING COLLATERAL OR THIS AGREEMENT.
Debtor will promptly notify Secured Party of any and all matters or occurrences
that may have a material adverse effect on the status or value of the Collateral
or this Agreement, including without limitation the occurrence of an Event of
Default, or an event which, with giving of notice or lapse of time, or both,
would constitute an Event of Default.
4.8 AGREEMENTS PERTAINING TO COLLATERAL. Debtor will not enter into any
type of contract or agreement pertaining to any of the Collateral or in any way
transfer any voting rights pertaining to the Collateral to any person.
4.9 CHANGE OF NAME. Debtor shall not change its name (or any assumed
name or other name under which Debtor does business) unless at least thirty (30)
days prior to the effective date of any such name change, Debtor gives Secured
Party written notice of such intended name change and the new name. Debtor shall
execute all such documents and agreements (including without limitation security
agreements, financing statements, and amendments to financing statements) as
Secured Party may reasonably request in connection with any such name change.
4.10 DILUTION OF OWNERSHIP. As to any securities pledged as Collateral,
Debtor will not consent to or approve of the issuance of (i) any additional
shares of any class of securities of such issuer, (ii) any instrument
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such securities, or (iii) any warrants, options, contracts or other
commitments entitling any third party to purchase or otherwise acquire any such
securities.
4.11 RESTRICTIONS ON SECURITIES. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Party. Debtor will not engage in
any stock split, reverse stock split, stock dividend, reclassification, or other
similar act or transaction regarding its capital stock unless the Consolidated
Shares are included in such act or transaction and effected thereby in all
respects the same as any other shares, or class of shares, of Debtors capital
stock.
ARTICLE V
DEBTORS AFFIRMATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees as follows:
5.1 FINANCIAL STATEMENTS. Debtor and each Subsidiary shall maintain a
system of accounting reasonably satisfactory to Secured Party and in accordance
with generally accepted accounting principles consistently applied, and will
permit Secured Party's officers or authorized representatives to visit and
inspect Debtor's and Subsidiarys books of account and other records at such
reasonable times and as often as Secured Party may desire during office hours
and after reasonable notice to Debtor and the applicable Subsidiary. Unless
written notice of another location is given to Secured Party, Debtor's books and
records will be located at Debtor's address set forth above. Debtor and each
Subsidiary further agree that Debtor and the Subsidiaries will promptly provide
Secured Party with such additional information, reports or statements respecting
their business operations and financial condition as Secured Party may
reasonably request from time to time. Debtor shall deliver to Lender, within
three (3) days after filing same, all annual, periodic, and other filings made
by Debtor with the Securities and Exchange Commission.
5.2 INSURANCE. Debtor and each Subsidiary shall maintain insurance with
responsible insurance companies on such of its properties, in such amounts and
against such risks as is customarily maintained by similar businesses operating
in the same vicinity, specifically to include a policy of fire and extended
coverage insurance covering all assets, and liability insurance, all to be with
such companies and in such amounts satisfactory to Secured Party and to contain
a mortgage clause naming Secured Party as its interest may appear. Evidence of
such insurance will be supplied to Secured Party.
5.3 EXISTENCE AND COMPLIANCE. Debtor and each Subsidiary shall maintain
its corporate existence in good standing and comply with all Laws applicable to
it or to any of its property, business operations and transactions. Debtor and
each Subsidiary shall qualify as a foreign corporation in all jurisdictions
wherein any property now or hereafter owned or any business now or hereafter
transacted by Debtor or such Subsidiary makes such qualifications necessary.
5.4 ADVERSE CONDITIONS OR EVENTS. Debtor and the Subsidiaries shall
promptly advise Secured Party in writing of any litigation filed against Debtor
or any Subsidiary and of any condition, event or act which comes to its
attention that would or might have a material adverse effect on Debtors or any
Subsidiarys financial condition or on Debtors ability to perform the Obligations
or any Subsidiarys ability to perform under its guaranty agreement executed in
favor of Secured Party with respect to the Obligations, including without
limitation any Environmental Condition that might have such a material adverse
effect the financial condition of Debtor or any Subsidiary, any Reportable
Event, or any event that could be the basis for institution of proceedings by
the Pension Benefit Guaranty Corporation to terminate a plan subject to erisa.
5.5 TAXES. Debtor and each Subsidiary shall pay all taxes as they become
due and payable.
5.6 MAINTENANCE. Debtor and each Subsidiary shall maintain all of its
tangible property in good condition and repair, reasonable wear and tear
excepted, and make all necessary replacements thereof, and preserve and maintain
all licenses, privileges, franchises, certificates and the like necessary for
the operation of their respective business.
5.7 ENVIRONMENTAL. Debtor and each Subsidiary shall promptly give
Secured Party written notice of any investigation, claim, demand, lawsuit or
other action by any governmental or regulatory agency or private party involving
any property owned or leased by Debtor or any Subsidiary and any Hazardous
Substance or Environmental Law of which Debtor or any Subsidiary has knowledge.
If Debtor or any Subsidiary learns, or is notified by any governmental or
regulatory authority, that any removal or other remediation of any Hazardous
Substance affecting any property owned by Debtor or any Subsidiary is necessary,
Debtor or such Subsidiary shall promptly take all necessary remedial actions in
accordance with Environmental Law.
5.8 SUBSIDIARIES. Subsidiary means (a) CES; (b) Cierra; (c) Larco; (d)
KR Industrial; (e) Exsorbet Technical; (f) Acquisition; and (g) 7-7. Debtor and
Secured Party contemplate that, from time to time, additional subsidiaries,
either directly or indirectly wholly-owned by Debtor, may be formed. Upon such
formation, each such new subsidiary shall sign a Guaranty Agreement in the form
substantially the same as those executed in connection with the Security
Documents, and shall execute and be bound by the Refinancing Agreement. Each
such new subsidiary shall be deemed a Subsidiary as defined in and used in this
Agreement and shall be subject to the terms, conditions, and covenants of this
Agreement.
5.9 DIVIDEND RIGHTS. Secured Party shall have the sole right to receive,
hold and apply as Collateral any dividends or other distributions with respect
to the Collateral, or any part thereof, in cash or in kind. All dividend and
other distributions which are received by Debtor contrary to the provisions the
preceding sentence shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Debtor, and shall be forthwith paid over
to Secured Party in the exact form received (properly endorsed or assigned if
requested by Secured Party), to be held by Secured Party as Collateral, or, in
Secured Partys sole discretion, to be applied against payment of any Obligation.
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that Debtor and each of its Subsidiaries will not, without the prior
written consent of Secured Party:
6.1 TRANSFE OF ASSETS. Enter into any merger or consolidation, or sell,
lease, assign, or otherwise dispose of or transfer any assets having a book
value or fair market value of greater than $50,000 except in the normal course
of its business.
6.2 CHANGE IN OWNERSHIP OR STRUCTURE. Dissolve or liquidate; become a party
to any merger or consolidation; reorganize as a professional corporation;
acquire by purchase, lease or otherwise all or substantially all of the assets
or capital stock of any corporation or other entity; or sell, transfer, lease,
or otherwise dispose of all or any substantial part of its property or assets or
business.
6.3 LIENS. Knowingly grant, suffer, or permit liens on or security
interests in Debtor's or such Subsidiarys assets, or fail to promptly pay all
lawful claims, whether for labor, materials, or otherwise, except for purchase
money security interests arising in the ordinary course of business.
6.4 LOANS. Make any loans, advances or investments to or in any joint
venture, corporation or other entity, except for the purchase of U.S. Government
obligations or the purchase of Federally-insured certificates of deposit.
6.5 BORROWINGS. Create, incur, assume, or become liable in any manner for
any indebtedness (for borrowed money, deferred payment for the purchase of
assets, lease payments, as surety or guarantor of the debt of another, or
otherwise) other than to Secured Party without Secured Party's prior written
consent, except trade debts incurred in the ordinary course of business.
6.6 VIOLATE OTHER COVENANTS.Violate or fail to comply with any covenants or
agreements regarding other debt which will or would with the passage of time or
upon demand cause the maturity of any other debt to be accelerated.
6.7 ENVIRONMENTAL. Cause or permit the presence, use, disposal, storage, or
release of any Hazardous Materials on or in any property owned by, leased by, or
managed or operated by Debtor or any Subsidiary. Debtor and each Subsidiary
shall not do, nor allow anyone else to do, any act that is in violation of any
Environmental Law.
6.8 DIVIDENDS. Declare any dividends on any shares of any class of its
capital stock, or apply any of its property or assets to the purchase,
redemption or other retirement of any shares of any class of capital stock or in
any way amend its capital structure.
6.9 CHARACTER OF BUSINESS. Change the general character of business as
conducted at the date hereof, or engage in any type of business not reasonably
related to its business as presently and normally conducted.
ARTICLE VII
DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. An Event of Default (herein so called) shall exist
if any one or more of the following events shall occur:
(a) The failure of Debtor to pay any amount of principal under
and/or interest on the New Note, or any other amounts due under the New Note
within fifteen (15) calendar days after such principal, interest or other amount
is due;
(b) Debtors breach of a covenant in this Agreement or any other
failure to perform its obligations under this Agreement or any other Security
Documents;
(c) Any representation or warranty made in this Agreement or any
other Security Documents shall be false or materially misleading, as determined
in the reasonable discretion of Secured Party;
(d) The occurrence of an Event of Default of any other
Security Documents;
(e) If Debtor or any other party obligated to pay any portion of
the Obligations: (i) becomes insolvent (except for any insolvency, as of the
date hereof, of CES, Cierra or 77), or makes a transfer in fraud of creditors,
or makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not paying its
debts as such debts become due and Secured Party, in good faith, determines that
such event or condition could l to a material impairment of the Collateral, or
any part thereof, or of any other payment security for any of the Obligations;
(iii) has a receiver, trustee or custodian appointed for, or take possession of,
all or substantially all of the assets of such party or any of the Collateral,
either in a proceeding brought by such party or in a proceeding brought against
such party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code or any other present
or future federal or state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called Applicable Bankruptcy Law) or an
involuntary petition for relief is filed against such party under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within sixty (60)
days after the filing thereof, or an order for relief naming such party is
entered under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter existing
is requested or consented to by such party; (v) fails to have discharged within
a period of sixty (60) days any attachment, sequestration or similar writ levied
upon any property of such party; or (vi) fails to pay within ninety(90) days any
final money judgment against such party; or
(f) The issuer of any securities constituting Collateral files a
petition for relief under any Applicable Bankruptcy Law, an involuntary petition
for relief is filed against any such issuer under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within thirty (30) days after the
filing thereof, or an order for relief naming any such issuer is entered under
any Applicable Bankruptcy Law.
7.2 SECURED PARTYS REMEDIES. Upon the occurrence of an Event of
Default:
(a) Secured Party may declare the Obligations in whole or part
immediately due and may enforce payment and performance of the same and exercise
any rights under the Texas ucc, rights and remedies of Secured Party under this
Agreement, or otherwise.
(b) Secured Party may, at Secured Party's option and at the
expense of Debtor, either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor might reasonably so
act if this Agreement had not been made: (i) do all things requisite,
convenient, or necessary to enforce the performance and observance of all
rights, remedies and privileges of Debtor arising from the Collateral, or any
part thereof, including without limitation compromi waiving, excusing, or in any
manner releasing or discharging any obligation of any party to or arising from
the Collateral;
(ii) take possession of the books, papers, chattel paper, documents of title,
and accounts of Debtor, wherever located, relating to the Collateral; (iii) xxx
or otherwise collect and receive money attributable to the Collateral; and (iv)
exercise any other lawfully available powers or remedies, and do all other
things which Secured Party deems requisite, convenient or necessary or which the
Secured Party deems proper to protect the Security Interest.
(b) Secured Party may foreclose this Agreement in the manner now
or hereafter provided or permitted by law and may upon such reasonable
notification prior thereto as may be required by applicable law (Debtor hereby
agreeing that ten days' notice is commercially reasonable), sell, assign,
transfer, or otherwise dispose of the Collateral at public or private sale, in
whole or in part, and Secured Party may, in its own name or as Debtors
attorneyinfact effectively assign and transfer the Collateral, or any part
thereof, absolutely, and execute and deliver all necessary assignments,
conveyances, bills of sale, and other instruments with power to substitute one
or more persons or corporations with like power. Any such foreclosure sale,
assignment, transfer, or other disposition shall, to the extent permitted by
law, be a perpetual bar, both at law and in equity, against Debtor and all
persons and corporations lawfully claiming by or through or under Debtor. Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the Collateral, or any part thereof, and upon
compliance with the terms of sale may hold, retain, possess and dispose of the
Collateral, in its absolute right without further accountability. Secured Party
shall have the right to be credited on the amount of its bid a corresponding
amount of the Obligations as of the date of such sale.
(c) If, in the opinion of Secured Party, there is any question
that a public sale or distribution of any Collateral will violate any state or
federal securities law, Secured Party (i) may offer and sell securities
privately to purchasers who will agree to take them for investment purposes and
not with a view to distribution and who will agree to imposition of restrictive
legends on the certificates representing the security, or (ii) may sell such
securities in an intrastate offering und Section 3(a)(11) of the Securities Act
of 1933, and no sale so made in good faith by Secured Party shall be deemed to
be not commercially reasonable because so made.
(d) Not in limitation of any other provision of this Agreement,
Secured Party shall have all rights and remedies of a secured party under the
Texas UCC.
7.3 APPLICATION OF PROCEEDS. Secured Party may apply the proceeds of any
foreclosure sale hereunder or from any other permitted disposition of the
Collateral or any part thereof as follows: (a)first, to the payment of all
reasonable costs and expenses of any foreclosure and collection hereunder and
all proceedings in connection therewith, including reasonable attorneys' fees;
(b)then, to the reimbursement of Secured Party for all disbursements made by
Secured Party for taxes, assessments or liens superior to the Security Interest
and which Secured Party shall deem expedient to pay; (c)then, to the
reimbursement of Secured Party of any other disbursements made by Secured Party
in accordance with the terms hereof; (d) then, to or among the amounts of fees,
interest and principal then owing and unpaid in respect of the Obligations, in
such priority as Secured Party may determine in its discretion; and (e)the
remainder of such proceeds, if any, shall be paid to Debtor. If such proceeds
shall be insufficient to discharge the entire Obligations, Secured Party shall
have any other available legal recourse against Debtor and all other persons
obligated under, or for the performance of, the Security Documents and
Refinancing Agreement, or on the New Note, for the deficiency, together with
interest thereon at fifteen percent (15%) per annum.
7.4 ENFORCEMENT OF OBLIGATIONS. Nothing in this Agreement or in any
other agreement shall affect or impair the unconditional and absolute right of
the Secured Party to enforce the Obligations as and when the same shall become
due in accordance with the terms of the New Note.
7.5 VOTING RIGHTS. Upon the occurrence of an Event of Default, Debtor
will not exercise any voting rights with respect to securities pledged as
Collateral. Debtor hereby irrevocably appoints Secured Party as Debtors
attorneyinfact (such power of attorney being coupled with an interest) and proxy
to exercise any voting rights with respect to Debtors securities pledged as
Collateral upon the occurrence of an Event of Default.
ARTICLE VIII
RIGHTS OF SECURED PARTY
8.1 SUBROGATION. Upon the occurrence of an Event of Default, Secured
Party, at its election, may subrogate to all of the interest, rights and
remedies of the Debtor, in respect to any of the Collateral or agreements
pertaining thereto.
8.2 SECURED PARTY APPOINTED ATTORNEYINFACT. Debtor hereby appoints
Secured Party as attorneyinfact of Debtor, with full authority in the place and
stead of Debtor and in the name of Debtor, Secured Party or otherwise, from time
to time on Secured Party's discretion and upon the occurrence of an Event of
Default, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation: (a) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (b) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) of this Section 8.2; (c) to file any claims or take
any action or institute any proceeding which Secured Party may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the Collateral, or any part thereof, absolutely and to execute and
deliver endorsements, assignments, conveyances, bills of sale and other
instruments with power to substitute one or more persons or corporation with
like power.
8.3 PERFORMANCE BY SECURED PARTY. If Debtor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause the
performance of, such agreement, and the reasonable expenses of Secured Party
incurred in connection therewith shall be payable by Debtor under Section 8.8.
In no event, however, shall Secured Party have any obligation or duties
whatsoever to perform any covenant or agreement of Debtor contained herein, and
any such performance by Secured Party shall be wholly discretionary with Secured
Party.
8.4 DUTIES OF SECURED PARTY. The powers conferred upon Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for money actually
received by it hereunder, Secured Party shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation, duty
or responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Debtor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral unless (i) Debtor makes
written demand to Secured Party to do so, (ii) such written demand is received
by Secured Party in sufficient time to permit Secured Party to take the action
demanded in the ordinary course of its business, and (iii) Debtor provides
additional collateral, acceptable to Secured Party in its sole discretion; (c)
collect any amounts payable in respect of the Collateral (Secured Party being
liable to account to Debtor only for what Secured Party may actually receive or
collect thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until (i) Debtor
makes written demand upon Secured Party to sell the Collateral, and (ii) Debtor
provides additional collateral, acceptable to Secured Party in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Debtor.
8.5 NO LIABILITY OF SECURED PARTY. Neither the acceptance of this
Agreement by Secured Party, nor the exercise of any rights hereunder by Secured
Party, shall be construed in any way as an assumption by Secured Party of any
obligations, responsibilities, or duties of Debtor arising in connection with
the Collateral assigned hereunder or otherwise bind Secured Party to the
performance of any obligations respecting the Collateral, it being expressly
understood that Secured Party shall not be obligated to perform, observe, or
discharge any obligation, responsibility, duty, or liability of Debtor in
respect of any of the Collateral, including without limitation appearing in or
defending any action, expending any money or incurring any expense in connection
therewith.
8.6 RIGHT OF SECURED PARTY TO DEFEND ACTION AFFECTING SECURITY. Secured
Party may, at the expense of Debtor, appear in and defend any action or
proceeding at law or in equity purporting to affect Secured Party's Security
Interest under this Agreement.
8.7 RIGHT OF SECURED PARTY TO PREVENT OR REMEDY DEFAULT. If Debtor shall
fail to perform any of the covenants, conditions and agreements required to be
performed and observed by Debtor under the New Note, or any other instruments
secured hereby, or in respect of the Collateral (subject to any applicable
default cure period), Secured Party (a) may but shall not be obligated to take
any action Secured Party deems necessary or desirable to prevent or remedy any
such default by Debtor or otherwise to protect the Security Interest, and (b)
shall have the absolute and immediate right to take possession of the Collateral
or any part thereof (to the extent Secured Party has not previously taken
possession) to such extent and as often as the Secured Party, in its sole
discretion, deems necessary or desirable in order to prevent or to cure any such
default by Debtor, or otherwise to protect the security of this Agreement.
Secured Party may advance or expend such sums of money for the account of Debtor
as Secured Party in its sole discretion deems necessary for any such purpose.
8.8 SECURED PARTY'S EXPENSES. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision of this Agreement for the protection of its security or for the
enforcement of any of its rights hereunder, or in foreclosure proceedings
commenced and subsequently abandoned, or in any dispute or litigation in which
Secured Party or the holder of any of the Obligations may become involved by
reason of or arising out of the New Note, or the Collateral shall be a part of
the Obligations and shall be paid by Debtor to Secured Party, upon demand, and
shall bear interest until paid at the rate otherwise chargeable on the New Note,
but not to exceed the maximum rate of interest permitted by applicable law, from
the date of such payment until repaid by Debtor.
8.9. CONVERTIBLE COLLATERAL. Secured Party may present for conversion
any Collateral which is convertible into any other instrument or investment
security or a combination thereof with cash, but Secured Party shall not have
any duty to present for conversion any Collateral unless it shall have received
from Debtor detailed written instructions to that effect at a time reasonably
far in advance of the final conversion date to make such conversion possible.
8.10 SECURED PARTY'S RIGHT OF SETOFF. Upon the happening of any event
entitling Secured Party to pursue any remedy provided herein, or if Secured
Party shall be served with garnishment process in which Debtor shall be named as
defendant, whether or not Debtor shall be in default hereunder at the time,
Secured Party may, but shall not be required to, setoff any indebtedness owing
by Secured Party to Debtor against any of the Obligations without first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Secured Party or its Security Interest.
8.11 REMEDIES. No right or remedy herein reserved to Secured Party is
intended to be exclusive of any other right or remedy, but each and every such
remedy shall be cumulative, not in lieu of, but in addition to any other rights
or remedies given under this Agreement and all other security documents. Any and
all of Secured Party's rights and remedies may be exercised from time to time
and as often as such exercise as deemed necessary or desirable by Secured Party.
8.12 DEBTOR'S WAIVERS. Debtor waives notice of the creation, advance,
increase, existence, extension, or renewal of, and of any indulgence with
respect to, the Obligations; waives notice of intent to accelerate, notice of
acceleration, notice of intent to demand, presentment, demand, notice of
dishonor, and protest; waives notice of the amount of the Obligations
outstanding at any time, notice of any change in financial condition of any
person liable for the Obligations or any part thereof, notice of any Event of
Default, and all other notices respecting the Obligations; and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by Secured Party in its discretion, without notice
to Debtor.
8.13 OTHER PARTIES AND OTHER COLLATERAL. No renewal or extension of or
any other indulgence with respect to the Obligations or any part thereof, no
release of any security, no release of any person (including any maker,
endorser, guarantor, or surety) liable on the Obligations, no delay in
enforcement of payment, and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor or guaranty thereof or under this Agreement shall in other manner
impair or affect the rights of Secured Party under the law, under this
Agreement, or under any other agreement pertaining to the other security for the
Obligations, before foreclosing upon the Collateral for the purpose of paying
the Obligations. Debtor waives any right to the benefit of or to require or
control application of any other security or proceeds thereof, and Debtor agrees
that Secured Party shall have no duty or obligation to Debtor to apply to the
Obligations any such other security or proceeds thereof.
ARTICLE IX
MISCELLANEOUS
9.1 TERMS COMMERCIALLY REASONABLE. The terms of this Agreement shall be
deemed commercially reasonable within the meaning of the Texas ucc.
9.2 NOTICES. Any notices or demands required or permitted to be given
hereunder shall be deemed sufficiently given if in writing and personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective addresses set forth below, or at such other
address as the above parties may from time to time designate by written notice
to the other given in accordance with this Section 9.2. Any such notice, if
personally delivered or transmitted by telex or telegram, shall be deemed to
have been given on the date so delivered or transmitted or, if mailed, be deemed
to have been given on the day after such notice is placed in the United States
mail in accordance with this Section 9.2.
Secured Party: 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxx, Xx.
with copy to: Xxxxxxx X. XxXxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1900 Frost Bank Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Debtor: 0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
9.3 PARTIES BOUND. Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any assignment or transfer of any of the Obligations or the
Collateral, Secured Party thereafter shall be fully discharged from any
responsibility with respect to the Collateral so assigned or transferred, but
Secured Party shall retain all rights and powers hereby given with respect to
any of the Obligations or Collateral not so assigned or transferred. All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives, heirs,
successors, and assigns of Debtor.
9.4 WAIVER. No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right. No waiver by Secured Party of any right hereunder of
any default by Debtor shall be binding upon Secured Party unless in writing, and
no failure by Secured Party to exercise any power or right hereunder or waiver
of any default by Debtor shall operate as a waiver of any other or further
exercise of such right or power of any further default.
9.5 AGREEMENT CONTINUING. This Agreement shall constitute a
continuing agreement, applying to all future as well as existing transactions,
whether or not of the character contemplated at the date of this Agreement, and
if all transactions between Secured Party and Debtor shall be closed at any
time, shall be equally applicable to any new transactions thereafter. Provisions
of this Agreement, unless by their terms exclusive, shall be in addition to
other agreements between the parties.
9.6 DEFINITIONS. Unless the context indicated otherwise, definitions in
the Texas Business and Commerce Code (Texas ucc) apply to words and phrases in
this Agreement; if Texas ucc definitions conflict, Chapter 9 definitions apply.
9.7 MISCELLANEOUS. In this Agreement, whenever the context so requires,
the neuter gender includes the masculine and feminine, and the singular number
includes the plural and vice versa. The headings of paragraphs herein are
inserted only for convenience and shall in no way define, describe or limit the
scope of intent of any provisions of this Agreement. No change, amendment,
modification, cancellation, or discharge of any provision of this Agreement
shall be valid unless consented to in writing by Secured Party.
9.8 ASSIGNMENT OF SECURED PARTY'S INTEREST. Secured Party shall have the
right to assign all or any portion of its rights in this Agreement without
approval or consent. Debtor may not assign this Agreement or any of its rights
or obligations hereunder without the express prior written consent of Secured
Party in each instance.
9.9 APPLICABLE LAWS. This Agreement Shall Be Governed By And
Construed In Accordance With The Laws Of The State Of Texas And The Applicable
Laws Of The United States Of America.
9.10 ENTIRE AGREEMENT. This Agreement, the Security documents and the
New Note Represent The Final Agreement Between The Parties And May Not Be
Contradicted By Evidence Of Prior, Contemporaneous, Or Subsequent Oral
Agreements Of The Parties. There Are No Unwritten Oral Agreements Between The
Parties.
Executed this 6th day of November, 1997.
Debtor: Consolidated Eco-Systems, Inc.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
Name: Xxxxx X. Xxxxxxx, Xx.
Title: President/CEO
Secured Party: American Physicians Service Group, Inc.
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Senior VP
SCHEDULE I
TO ASSIGNMENT AND SECURITY AGREEMENT
Environmental Laws means all Laws that relate to health, safety or
environmental protection, including without limitation the (i) Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984; (ii) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986; (iii) the Toxic Substances Control Act; (iv)
the Americans with Disabilities Act of 1990, and (iv) the Clean Air Act; all as
amended from time to time and including all regulations promulgated pursuant to
any one or more of them.
erisa means the Employment Retirement Income Security Act of 1974, as
amended, together with all rules and regulations issued pursuant thereto and all
rulings or interpretations adopted by any Governmental Entity thereunder.
Governmental Entity means any government (or any political subdivision
or jurisdiction thereof), court, bureau, agency, or other governmental authority
having jurisdiction over Debtor, any Subsidiary, or any of its or their
respective businesses, operations, assets, or properties.
Hazardous Material means those substances defined as toxic or hazardous
substances by or under any Environmental Laws.
Laws shall mean all applicable laws, ordinances, statutes, orders,
regulations, judgments, writs, or decrees of any Governmental Entity.
Schedule II
1. Certificate No. 1, dated January 24, 1997, for 1,000 shares of Eco
Acquisition, Inc. $0.001 par value common stock, issued to Consolidated
Eco-Systems, Inc.
2. Certificate No. 1, dated January 24, 1997, for 1,000 shares of Larco
Environmental Services, Inc. common stock, issued to Consolidated Eco-Systems,
Inc.
