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EXHIBIT 2.4
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is entered into as of November 30,
1999 by and among Xeta Corporation, an Oklahoma corporation (the "Borrower"),
U.S. Technologies Systems, Inc., a Missouri corporation ("UST"), and each of the
Borrower's Subsidiaries hereafter party hereto (the Borrower, UST and each of
such Subsidiaries shall be singularly referred to as a "Grantor" and
collectively as the "Grantors"), and Bank One, Oklahoma, NA, a national banking
association having its principal office in Tulsa, Oklahoma, in its capacity as
agent (the "Agent") for the lenders party to the Credit Agreement referred to
below.
PRELIMINARY STATEMENT
The Borrower, the Agent and the Lenders are entering into a Credit
Agreement dated as of November 30, 1999 (as it may be amended or modified from
time to time, the "Credit Agreement"). Each Grantor is entering into this Pledge
and Security Agreement (as it may be amended or modified from time to time, the
"Security Agreement") in order to induce the Lenders to enter into and extend
credit to the Borrower under the Credit Agreement.
ACCORDINGLY, each Grantor and the Agent, on behalf of the Lenders,
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. Terms Defined in Oklahoma Uniform Commercial Code. Terms defined
in the Oklahoma Uniform Commercial Code which are not otherwise defined in this
Security Agreement are used herein as defined in the Oklahoma Uniform Commercial
Code as in effect on the date hereof.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" means all rights to payment for goods sold or leased or
services rendered by any Grantor, whether or not earned by performance, together
with all security interests or other security held by or granted to such Grantor
to secure such rights to payment.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" means any writing or group of writings which evidences
both a monetary obligation and a security interest in or a lease of specific
goods.
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"Collateral" means all Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Fixtures, General Intangibles, Investment Property,
Instruments, Inventory, Pledged Deposits, Stock Rights and Other Collateral,
wherever located, in which any Grantor now has or hereafter acquires any right
or interest, and the proceeds, insurance proceeds and products thereof, together
with all books and records, customer lists, credit files, computer files,
programs, printouts and other computer materials and records related thereto.
"Control" shall have the meaning set forth in Article 8 of the Oklahoma
Uniform Commercial Code as in effect from time to time.
"Default" means an event described in Section 5.1.
"Deposit Accounts" means all demand, time, savings, passbook and other
deposit accounts maintained with any bank, savings and loan association, credit
union or like organization, other than an account represented by a certificate
of deposit.
"Documents" means all documents of title and goods evidenced thereby,
including without limitation all bills of lading, dock warrants, dock receipts,
warehouse receipts and orders for the delivery of goods, and also any other
document which in the regular course of business or financing is treated as
adequately evidencing that the person in possession of it is entitled to
receive, hold and dispose of the document and the goods it covers.
"Equipment" means all equipment, machinery, furniture and goods used or
usable by each Grantor in its business and all other tangible personal property
(other than Inventory), and all accessions and additions thereto, including,
without limitation, all Fixtures.
"Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"Fixtures" means all goods which become so related to particular real
estate that an interest in such goods arises under any real estate law
applicable thereto, including, without limitation, all trade fixtures.
"General Intangibles" means all intangible personal property (other
than Accounts) including, without limitation, all contract rights, rights to
receive payments of money, choses in action, causes of action, judgments, tax
refunds and tax refund claims, patents, trademarks, trade names, copyrights,
licenses, franchises, computer programs, software, goodwill, customer and
supplier contracts, interests in general or limited partnerships, joint ventures
or limited liability companies, reversionary interests in pension and profit
sharing plans and reversionary, beneficial and residual interests in trusts,
leasehold interests in real or personal property, rights to receive rentals of
real or personal property and guarantee and indemnity claims, including without
limitation any indemnity claims arising from or in connection with the UST
Acquisition Agreements or any other Acquisition Documents.
"Investment Property" means all securities, whether certificated or
uncertificated, security entitlements, securities accounts, commodity contracts,
and commodity accounts and any Stock Rights related thereto.
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"Instruments" means all negotiable instruments and other writings which
evidence a right to the payment of money and which are not themselves security
agreements or leases and are of a type which in the ordinary course of business
are transferred by delivery with any necessary endorsement or assignment,
including, without limitation, all checks, drafts, notes, bonds, debentures,
government securities, certificates of deposit and letters of credit.
"Inventory" means all goods held for sale or lease, or furnished or to
be furnished under contracts of service, or consumed in any Grantor's business,
including without limitation raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, all such goods that have been returned
to or repossessed by or on behalf of such Grantor, and all such goods released
to any Grantor or to third parties under trust receipts or similar documents.
"Lenders" means the lenders party to the Credit Agreement and their
successors and assigns.
"Lien" means any lien (statutory or other), security interest,
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, capitalized lease or other title
retention agreement).
"Obligations" means any and all existing and future indebtedness,
obligation and liability of every kind, nature and character, direct or
indirect, absolute or contingent (including all renewals, extensions and
modifications thereof and all fees, costs and expenses incurred by the Agent or
the Lenders in connection with the preparation, administration, collection or
enforcement thereof), of any Grantor to the Agent or any Lender or any branch,
subsidiary or affiliate thereof, arising under or pursuant to this Security
Agreement, the Credit Agreement and any promissory note or notes now or
hereafter issued under the Credit Agreement.
"Other Collateral" means any other personal property of any Grantor not
included within the defined terms Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Fixtures, General Intangibles, Instruments, Inventory,
Investment Property, Pledged Deposits and Stock Rights, including, without
limitation, all cash on hand and all deposit accounts or other deposits (general
or special, time or demand, provisional or final) with any bank or other
financial institution, it being intended that the Collateral include all
personal property of each Grantor.
"Pledged Deposits" means all time deposits of money, whether or not
evidenced by certificates, which a Grantor may from time to time designate as
pledged to the Agent or to any Lender as security for any Obligation, and all
rights to receive interest on said deposits.
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
the Borrower and any Lender or Affiliate thereof which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
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"Rate Management Obligations" means any and all obligations of the
Borrower, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
"Receivables" means the Accounts, Chattel Paper, Deposit Accounts,
Documents, Investment Property, Instruments, Pledged Deposits or Stock Rights,
and any other rights or claims to receive money which are General Intangibles or
which are otherwise included as Collateral.
"Required Secured Parties" means (x) prior to an acceleration of the
Obligations under the Credit Agreement, the Required Lenders and (y) after an
acceleration of the Obligations under the Credit Agreement, Lenders and their
Affiliates holding in the aggregate at least 66-2/3% of the total of (i) the
unpaid principal amount of outstanding Advances and (ii) the aggregate net early
termination payments and all other amounts then due and unpaid from the Borrower
to the Lenders or their Affiliates under Rate Management Transactions, as
determined by the Agent in its reasonable discretion, except that, in the event
there are not more than two (2) Lenders as of any relevant date after an
acceleration of the Obligations under the Credit Agreement, "Required Secured
Parties" means all of the Lenders and their Affiliates holding in the aggregate
at least 66-2/3% of the total of (i) the unpaid principal amount of outstanding
Advances and (ii) the aggregate net early termination payments and all other
amounts then due and unpaid from the Borrower to the Lenders or their Affiliates
under Rate Management Transactions.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Secured Obligations" means the Obligations and Rate Management
Obligations entered into with one or more of the Lenders or their Affiliates.
"Security" has the meaning set forth in Article 8 of the Oklahoma
Uniform Commercial Code as in effect from time to time
"Stock Rights" means any securities, dividends or other distributions
and any other right or property which any Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
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ARTICLE II
GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Agent, on behalf
of and for the ratable benefit of the Lenders and (to the extent specifically
provided herein) their Affiliates, a security interest in and to the Collateral
to secure the prompt and complete payment and performance of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Agent and the Lenders that:
3.1. Title, Authorization, Validity and Enforceability. Each Grantor
has good and valid rights in and title to the Collateral with respect to which
it has purported to grant a security interest hereunder, free and clear of all
Liens except for Liens permitted under Section 4.1.6, and has full power and
authority to grant to the Agent the security interest in such Collateral
pursuant hereto. The execution and delivery by each of the Grantors of this
Security Agreement has been duly authorized by proper corporate, partnership,
limited liability company or other proceedings, as applicable, and this Security
Agreement constitutes a legal, valid and binding obligation of each Grantor and
creates a security interest which is enforceable against each Grantor in all now
owned and hereafter acquired Collateral. When financing statements have been
filed in the appropriate offices against the Grantors in the locations listed on
Exhibit "F", the Agent will have a fully perfected first priority security
interest in that Collateral in which a security interest may be perfected by
filing, subject only to Liens permitted under Section 4.1.6.
3.2. Conflicting Laws and Contracts. Neither the execution and delivery
by the Grantors of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on any Grantor or such Grantor's
articles or certificate of incorporation or by-laws, partnership agreements, or
operating agreements, as the case may be, the provisions of any indenture,
instrument or agreement to which any Grantor is a party or is subject, or by
which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien pursuant to the
terms of any such indenture, instrument or agreement (other than any Lien of the
Agent on behalf of the Lenders).
3.3. Principal Location. Each Grantor's mailing address, and the
location of its chief executive office and of the books and records relating to
the Receivables, is disclosed in Exhibit "A"; no Grantor has any other places of
business except those set forth in Exhibit "A".
3.4. Property Locations. The Inventory, Equipment and Fixtures are
located solely at the locations described in Exhibit "A". All of said locations
are owned by a Grantor except for locations (i) which are leased by a Grantor as
lessee and designated in Part B of Exhibit "A" and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part C of Exhibit "A", with respect to which Inventory such
Grantor has delivered bailment agreements, warehouse receipts, financing
statements or other documents satisfactory to the Lenders to protect the Agent's
and the Lenders' security interest in such Inventory.
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3.5. No Other Names. No Grantor has conducted business under any name
except the name in which it has executed this Security Agreement.
3.6. No Default. No Default or Unmatured Default exists.
3.7. Accounts and Chattel Paper. The names of the obligors, amounts
owing, due dates and other information with respect to the Accounts and Chattel
Paper are and will be correctly stated in all records of the Grantors relating
thereto and in all invoices and reports with respect thereto furnished to the
Agent by the Grantors from time to time. As of the time when each Account or
each item of Chattel Paper arises, the Grantors shall be deemed to have
represented and warranted that such Account or Chattel Paper, as the case may
be, and all records relating thereto, are genuine and in all respects what they
purport to be.
3.8. Filing Requirements. None of the Equipment is covered by any
certificate of title, except for the vehicles described in Part A of Exhibit
"B". None of the Collateral is of a type for which security interests or liens
may be perfected by filing under any federal statute except for (i) the vehicles
described in Part B of Exhibit "B" and (ii) patents, trademarks and copyrights
held by a Grantor and described in Part C of Exhibit "B". The legal description,
county and street address of the property on which any Fixtures are located is
set forth in Exhibit "C" together with the name and address of the record owner
of each such property.
3.9. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming any
Grantor as debtor has been filed in any jurisdiction except (i) financing
statements naming the Agent on behalf of the Lenders as the secured party, (ii)
as described in Exhibit "D" and (iii) as permitted by Section 4.1.6
3.10. Federal Employer Identification Number. The Borrower's Federal
employer identification number is 00-0000000, and UST's Federal employer
identification number is 00-0000000.
3.11. Pledged Securities and Other Investment Property. Exhibit "E"
sets forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Agent. As designated, the applicable
Grantor is the direct and beneficial owner of each Instrument, Security and
other type of Investment Property listed on Exhibit "E" as being owned by it,
free and clear of any Liens, except for the security interest granted to the
Agent for the benefit of the Lenders hereunder. Each Grantor further represents
and warrants that (i) all such Instruments, Securities or other types of
Investment Property which are shares of stock in a corporation or ownership
interests in a partnership or limited liability company have been (to the extent
such concepts are relevant with respect to such Instrument, Security or other
type of Investment Property) duly and validly issued, are fully paid and
non-assessable and (ii) with respect to any certificates delivered to the Agent
representing an ownership interest in a partnership or limited liability
company, either such certificates are Securities as defined in Article 8 of the
Uniform Commercial Code of the applicable jurisdiction as a result of actions by
the issuer or otherwise, or, if such certificates are not Securities, such
Grantor has so informed the Agent so that the Agent may take steps to perfect
its security interest therein as a General Intangible.
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ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
4.1.1. Inspection. Each Grantor will permit the Agent or any
Lender, by its representatives and agents (i) to inspect the
Collateral, (ii) to examine and make copies of the records of the
Grantors relating to the Collateral and (iii) to discuss the Collateral
and the related records of the Grantors with, and to be advised as to
the same by, the Grantors' officers and employees (and, in the case of
any Receivable, with any person or entity which is or may be obligated
thereon), all at such reasonable times and intervals as the Agent or
such Lender may determine, and all at the Grantors' expense.
4.1.2. Taxes. Each Grantor will pay when due all taxes,
assessments and governmental charges and levies upon the Collateral,
except those which are being contested in good faith by appropriate
proceedings and with respect to which no Lien exists.
4.1.3. Records and Reports; Notification of Default. Each
Grantor will maintain complete and accurate books and records with
respect to the Collateral, and furnish to the Agent, with sufficient
copies for each of the Lenders, such reports relating to the Collateral
as the Agent shall from time to time request. Each Grantor will give
prompt notice in writing to the Agent and the Lenders of the occurrence
of any Default or Unmatured Default and of any other development,
financial or otherwise, which might materially and adversely affect the
Collateral.
4.1.4. Financing Statements and Other Actions; Defense of
Title. Each Grantor will execute and deliver to the Agent all financing
statements and other documents and take such other actions as may from
time to time be requested by the Agent in order to maintain a first
perfected security interest in and, in the case of Investment Property,
Control of, the Collateral. Each Grantor will take any and all actions
necessary to defend title to the Collateral against all persons and to
defend the security interest of the Agent in the Collateral and the
priority thereof against any Lien not expressly permitted hereunder.
4.1.5. Disposition of Collateral. No Grantor will sell, lease
or otherwise dispose of the Collateral except (i) prior to the
occurrence of a Default or Unmatured Default, dispositions specifically
permitted pursuant to Section 6.13 of the Credit Agreement, (ii) until
such time following the occurrence of a Default as such Grantor
receives a notice from the Agent instructing the Grantor to cease such
transactions, sales or leases of Inventory in the ordinary course of
business, and (iii) until such time as such Grantor receives a notice
from the Agent pursuant to Article VII, proceeds of Inventory and
Accounts collected in the ordinary course of business.
4.1.6. Liens. No Grantor will create, incur, or suffer to
exist any Lien on the Collateral except (i) the security interest
created by this Security Agreement, (ii) existing Liens described
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in Exhibit "D" and (iii) other Liens permitted pursuant to Section 6.15
[Liens] of the Credit Agreement.
4.1.7. Change in Location or Name. No Grantor will (i) have
any Inventory, Equipment or Fixtures or proceeds or products thereof
(other than Inventory and proceeds thereof disposed of as permitted by
Section 4.1.5) at a location other than a location specified in Exhibit
"A", (ii) maintain records relating to the Receivables at a location
other than at the location specified on Exhibit "A", (iii) maintain a
place of business at a location other than a location specified on
Exhibit "A", (iv) change its name or taxpayer identification number or
(v) change its mailing address, unless such Grantor shall have given
the Agent not less than 30 days' prior written notice thereof, and the
Agent shall have determined that such change will not adversely affect
the validity, perfection or priority of the Agent's security interest
in the Collateral.
4.1.8. Other Financing Statements. No Grantor will sign or
authorize the signing on its behalf of any financing statement naming
it as debtor covering all or any portion of the Collateral, except as
permitted by Section 4.1.6.
4.2. Receivables.
4.2.1. Certain Agreements on Receivables. No Grantor will
make or agree to make any discount, credit, rebate or other reduction
in the original amount owing on a Receivable or accept in satisfaction
of a Receivable less than the original amount thereof, except that,
prior to the occurrence of a Default, such Grantor may reduce the
amount of Accounts arising from the sale of Inventory in accordance
with consistent past practice and present policies and in the ordinary
course of business.
4.2.2. Collection of Receivables. Except as otherwise
provided in this Security Agreement, each Grantor will collect and
enforce, at such Grantor's sole expense, all amounts due or hereafter
due to such Grantor under the Receivables.
4.2.3. Delivery of Invoices. Each Grantor will deliver to the
Agent immediately upon its request after the occurrence of a Default
duplicate invoices with respect to each Account bearing such language
of assignment as the Agent shall specify.
4.2.4. Disclosure of Counterclaims on Receivables. If (i) any
discount, credit or agreement to make a rebate or to otherwise reduce
the amount owing on a Receivable exists or (ii) if, to the knowledge of
any Grantor, any dispute, setoff, claim, counterclaim or defense exists
or has been asserted or threatened with respect to a Receivable, such
Grantor will disclose such fact to the Agent in writing in connection
with the inspection by the Agent of any record of such Grantor relating
to such Receivable and in connection with any invoice or report
furnished by such Grantor to the Agent relating to such Receivable.
4.3. Inventory and Equipment.
4.3.1. Maintenance of Goods. Each Grantor will do all things
necessary to maintain, preserve, protect and keep the Inventory and the
Equipment in good repair and working and saleable condition.
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4.3.2. Insurance. The Grantors will (i) maintain fire and
extended coverage insurance on the Inventory and Equipment containing a
lender's loss payable clause in favor of the Agent, on behalf of the
Lenders, and providing that said insurance will not be terminated
except after at least 30 days' written notice from the insurance
company to the Agent, (ii) maintain such other insurance on the
Collateral for the benefit of the Agent as the Agent shall from time to
time request, (iii) furnish to the Agent upon the request of the Agent
from time to time the originals of all policies of insurance on the
Collateral and certificates with respect to such insurance and (iv)
maintain general liability insurance naming the Agent, on behalf of the
Lenders, as an additional insured.
4.3.3. Titled Vehicles. Each Grantor will give the Agent
notice of its acquisition of any vehicle covered by a certificate of
title and deliver to the Agent, upon request, the original of any
vehicle title certificate and do all things necessary to have the Lien
of the Agent noted on any such certificate.
4.4. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. Each Grantor will (i) deliver to the Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments (if any then exist), (ii) hold in trust for the Agent upon receipt
and immediately thereafter deliver to the Agent any Chattel Paper, Securities
and Instruments constituting Collateral, (iii) upon the designation of any
Pledged Deposits (as set forth in the definition thereof), deliver to the Agent
such Pledged Deposits which are evidenced by certificates included in the
Collateral endorsed in blank, marked with such legends and assigned as the Agent
shall specify, and (iv) upon the Agent's request, after the occurrence and
during the continuance of a Default, deliver to the Agent (and thereafter hold
in trust for the Agent upon receipt and immediately deliver to the Agent) any
Document evidencing or constituting Collateral.
4.5. Uncertificated Securities and Certain Other Investment Property.
Each Grantor will permit the Agent from time to time to cause the appropriate
issuers (and, if held with a securities intermediary, such securities
intermediary) of uncertificated securities or other types of Investment Property
not represented by certificates which are Collateral to xxxx their books and
records with the numbers and face amounts of all such uncertificated securities
or other types of Investment Property not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of the Agent granted
pursuant to this Security Agreement. Each Grantor will take any actions
necessary to cause (i) the issuers of uncertificated securities which are
Collateral and which are Securities and (ii) any financial intermediary which is
the holder of any Investment Property, to cause the Agent to have and retain
Control over such Securities or other Investment Property. Without limiting the
foregoing, each Grantor will, with respect to Investment Property held with a
financial intermediary, cause such financial intermediary to enter into a
control agreement with the Agent in form and substance satisfactory to the
Agent.
4.6. Stock and Other Ownership Interests.
4.6.1. Changes in Capital Structure of Issuers. No Grantor
will (i) permit or suffer any issuer of privately held corporate
securities or other ownership interests in a corporation, partnership,
joint venture or limited liability company constituting Collateral to
dissolve, liquidate, retire any of its capital stock or other
Instruments or Securities evidencing ownership,
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reduce its capital or merge or consolidate with any other entity, or
(ii) vote any of the Instruments, Securities or other Investment
Property in favor of any of the foregoing.
4.6.2. Issuance of Additional Securities. No Grantor will
permit or suffer the issuer of privately held corporate securities or
other ownership interests in a corporation, partnership, joint venture
or limited liability company constituting Collateral to issue any such
securities or other ownership interests, any right to receive the same
or any right to receive earnings, except to such Grantor.
4.6.3. Registration of Pledged Securities and other Investment
Property. Each Grantor will permit any registerable Collateral to be
registered in the name of the Agent or its nominee at any time at the
option of the Required Secured Parties.
4.6.4. Exercise of Rights in Pledged Securities and other
Investment Property. Each Grantor will permit the Agent or its nominee
at any time after the occurrence of a Default, without notice, to
exercise all voting and corporate rights relating to the Collateral,
including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any corporate securities
or other ownership interests or Investment Property in or of a
corporation, partnership, joint venture or limited liability company
constituting Collateral and the Stock Rights as if it were the absolute
owner thereof.
4.7. Pledged Deposits. No Grantor will withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Agent.
4.8. Deposit Accounts. Each Grantor will (i) upon the Agent's request,
notify each bank or other financial institution in which it maintains a deposit
account or other deposit (general or special, time or demand, provisional or
final) of the security interest granted to the Agent hereunder and cause each
such bank or other financial institution to acknowledge such notification in
writing and (ii) upon the Agent's request after the occurrence and during the
continuance of a Default, deliver to each such bank or other financial
institution a letter, in form and substance acceptable to the Agent,
transferring dominion and control over each such account to the Agent. In the
case of deposits maintained with Lenders, the terms of such letter shall be
subject to the provisions of the Credit Agreement regarding setoffs.
4.9. Federal, State or Municipal Claims. Each Grantor will notify the
Agent of any Collateral which constitutes a claim against the United States
government or any state or local government or any instrumentality or agency
thereof, the assignment of which claim is restricted by federal, state or
municipal law.
ARTICLE V
DEFAULT
5.1. Default. The occurrence of any one or more of the following
events shall constitute a Default:
5.1.1. Any representation or warranty made by or on behalf of
any Grantor under or in connection with this Security Agreement shall
be materially false as of the date on which made.
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5.1.2. The breach by any Grantor of any of the terms or
provisions of Article IV or Article VII.
5.1.3. The breach by any Grantor (other than a breach which
constitutes a Default under Section 5.1.1 or 5.1.2) of any of the terms
or provisions of this Security Agreement which is not remedied within
20 days after the giving of written notice to such Grantor by the
Agent.
5.1.4. Any material portion of the Collateral shall be: (i)
transferred or otherwise disposed of, either voluntarily or
involuntarily, in any manner not permitted by Section 4.1.5 or 8.7 or
(ii) lost, stolen, damaged or destroyed.
5.1.5. Any Secured Obligation shall not be paid when due,
whether at stated maturity, upon acceleration, or otherwise.
5.1.6. The occurrence of any "Default" under, and as defined
in, the Credit Agreement.
5.1.7. Any limited partnership interests or ownership
interests in a limited liability company which are included within the
Collateral shall at any time constitute a Security or the issuer of any
such interests shall take any action to have such interests treated as
a Security unless (i) all certificates or other documents constituting
such Security have been delivered to the Agent and such Security is
properly defined as such under Article 8 of the Uniform Commercial Code
of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise, or (ii) the Agent has entered into a
control agreement with the issuer of such Security or with a securities
intermediary relating to such Security and such Security is defined as
such under Article 8 of the Uniform Commercial Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or
otherwise.
5.2. Acceleration and Remedies. Upon the acceleration of the
obligations under the Credit Agreement pursuant to Section 8.1 thereof, the
Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and the Agent may,
with the concurrence or at the direction of the Required Secured Parties,
exercise any or all of the following rights and remedies:
5.2.1. Those rights and remedies provided in this Security
Agreement, the Credit Agreement, or any other Loan Document, provided
that this Section 5.2.1 shall not be understood to limit any rights or
remedies available to the Agent and the Lenders prior to a Default.
5.2.2. Those rights and remedies available to a secured party
under the Oklahoma Uniform Commercial Code (whether or not the Oklahoma
Uniform Commercial Code applies to the affected Collateral) or under
any other applicable law (including, without limitation, any law
governing the exercise of a bank's right of setoff or bankers' lien)
when a debtor is in default under a security agreement.
5.2.3. Without notice except as specifically provided in
Section 8.1 or elsewhere herein, sell, lease, assign, grant an option
or options to purchase or otherwise dispose of the Collateral
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or any part thereof in one or more parcels at public or private sale,
for cash, on credit or for future delivery, and upon such other terms
as the Agent may deem commercially reasonable.
5.3. Debtor's Obligations Upon Default. Upon the request of the Agent
after the occurrence of a Default, each Grantor will:
5.3.1. Assembly of Collateral. Assemble and make available to
the Agent the Collateral and all records relating thereto at any place
or places specified by the Agent.
5.3.2. Secured Party Access. Permit the Agent, by the Agent's
representatives and agents, to enter any premises where all or any part
of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral
and to remove all or any part of the Collateral.
5.4. License. The Agent is hereby granted a license or other right to
use, following the occurrence and during the continuance of a Default, without
charge, each Grantor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral, and, following the occurrence and during the continuance of a
Default, each Grantor's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit. In addition, each Grantor hereby irrevocably
agrees that the Agent may, following the occurrence and during the continuance
of a Default, sell any of such Grantor's Inventory directly to any person,
including without limitation persons who have previously purchased such
Grantor's Inventory from the Grantor and in connection with any such sale or
other enforcement of the Agent's rights under this Agreement, may sell Inventory
which bears any trademark owned by or licensed to any Grantor and any Inventory
that is covered by any copyright owned by or licensed to any Grantor and the
Agent may finish any work in process and affix any trademark owned by or
licensed to any Grantor and sell such Inventory as provided herein.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Agent or any Lender to exercise any right
or remedy granted under this Security Agreement shall impair such right or
remedy or be construed to be a waiver of any Default or an acquiescence therein,
and any single or partial exercise of any such right or remedy shall not
preclude any other or further exercise thereof or the exercise of any other
right or remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by the Agent with the concurrence or at the direction
of the Lenders required under Section 8.2 of the Credit Agreement and then only
to the extent in such writing specifically set forth. All rights and remedies
contained in this Security Agreement or by law afforded shall be cumulative and
all shall be available to the Agent and the Lenders until the Secured
Obligations have been paid in full.
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ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Lockboxes. Upon request of the Agent after the occurrence of a
Default or Unmatured Default, each Grantor shall execute and deliver to the
Agent irrevocable lockbox agreements in the form provided by or otherwise
acceptable to the Agent, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of the Agent
granted hereunder and of irrevocable instructions to wire all amounts collected
therein to a special collateral account at the Agent.
7.2. Collection of Receivables. The Agent may at any time after the
occurrence of a Default, by giving the Grantors written notice, elect to require
that the Receivables be paid directly to the Agent for the benefit of the
Lenders. In such event, each Grantor shall, and shall permit the Agent to,
promptly notify the account debtors or obligors under the Receivables of the
Lenders' interest therein and direct such account debtors or obligors to make
payment of all amounts then or thereafter due under the Receivables directly to
the Agent. Upon receipt of any such notice from the Agent, each Grantor shall
thereafter hold in trust for the Agent, on behalf of the Lenders, all amounts
and proceeds received by it with respect to the Receivables and Other Collateral
and immediately and at all times thereafter deliver to the Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. The Agent shall hold and
apply funds so received as provided by the terms of Sections 7.3 and 7.4.
7.3. Special Collateral Account. The Agent may require all cash
proceeds of the Collateral to be deposited in a special non-interest bearing
cash collateral account with the Agent and held there as security for the
Secured Obligations. No Grantor shall have any control whatsoever over said cash
collateral account. If no Default or Unmatured Default has occurred or is
continuing, the Agent shall from time to time deposit the collected balances in
said cash collateral account into the Borrower's general operating account with
the Agent. If any Default or Unmatured Default has occurred and is continuing,
the Agent may (and shall, at the direction of the Required Secured Parties),
from time to time, apply the collected balances in said cash collateral account
to the payment of the Secured Obligations whether or not the Secured Obligations
shall then be due.
7.4. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Agent
incurred in connection with the collection and enforcement of the
Secured Obligations or of the security interest granted to the Agent
pursuant to this Security Agreement;
(b) SECOND, to payment of that portion of the Secured
Obligations constituting accrued and unpaid interest and fees, pro rata
among the Lenders and their Affiliates in accordance with the amount of
such accrued and unpaid interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Secured
Obligations and the net early termination payments and any other Rate
Management Obligations then due and unpaid from the Borrower to any of
the Lenders or their Affiliates, pro rata among the Lenders and their
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Affiliates in accordance with the amount of such principal and such net
early termination payments and other Rate Management Obligations then
due and unpaid owing to each of them;
(d) FOURTH, to payment of any Secured Obligations (other than
those listed above) pro rata among those parties to whom such Secured
Obligations are due in accordance with the amounts owing to each of
them; and
(e) FIFTH, the balance, if any, after all of the Secured
Obligations have been satisfied, shall be deposited by the Agent into
the Borrower's general operating account with the Agent.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral. Each Grantor hereby waives
notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral may be
made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the applicable Grantor,
addressed as set forth in Article IX, at least ten days prior to (i) the date of
any such public sale or (ii) the time after which any such private sale or other
disposition may be made.
8.2. Compromises and Collection of Collateral. The Grantors and the
Agent recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Receivables, that certain of
the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, each Grantor agrees that the Agent
may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such action by the Agent shall be
commercially reasonable so long as the Agent acts in good faith based on
information known to it at the time it takes any such action.
8.3. Secured Party Performance of Debtor Obligations. Without having
any obligation to do so, the Agent may perform or pay any obligation which any
Grantor has agreed to perform or pay in this Security Agreement and each Grantor
shall reimburse the Agent for any amounts paid by the Agent pursuant to this
Section 8.3. The Grantors' obligation to reimburse the Agent pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. Each
Grantor irrevocably authorizes the Agent at any time and from time to time in
the sole discretion of the Agent and appoints the Agent as its attorney in fact
(i) to execute on behalf of such Grantor as debtor and to file financing
statements necessary or desirable in the Agent's sole discretion to perfect and
to maintain the perfection and priority of the Agent's security interest in the
Collateral, (ii) to indorse and collect any cash proceeds of the Collateral,
(iii) to file a carbon, photographic or other reproduction of this Security
Agreement or any financing statement with respect to the Collateral as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the
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perfection and priority of the Agent's security interest in the Collateral, (iv)
to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral and which are Securities or with
financial intermediaries holding other Investment Property as may be necessary
or advisable to give the Agent Control over such Securities or other Investment
Property, (v) subject to the terms of Section 4.1.5, to enforce payment of the
Receivables in the name of the Agent or any Grantor, (vi) to apply the proceeds
of any Collateral received by the Agent to the Secured Obligations as provided
in Article VII and (vii) to discharge past due taxes, assessments, charges, fees
or Liens on the Collateral (except for such Liens as are specifically permitted
hereunder), and each Grantor agrees to reimburse the Agent on demand for any
payment made or any expense incurred by the Agent in connection therewith,
provided that this authorization shall not relieve any Grantor of any of its
obligations under this Security Agreement or under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.1.5, 4.1.6, 4.4, 5.3, or 8.7 or in Article VII will cause irreparable
injury to the Agent and the Lenders, that the Agent and Lenders have no adequate
remedy at law in respect of such breaches and therefore agrees, without limiting
the right of the Agent or the Lenders to seek and obtain specific performance of
other obligations of the Grantors contained in this Security Agreement, that the
covenants of each Grantor contained in the Sections referred to in this Section
8.5 shall be specifically enforceable against each Grantor.
8.6. Use and Possession of Certain Premises. Upon the occurrence of a
Default, the Agent shall be entitled to occupy and use any premises owned or
leased by any Grantor where any of the Collateral or any records relating to the
Collateral are located until the Secured Obligations are paid or the Collateral
is removed therefrom, whichever first occurs, without any obligation to pay such
Grantor for such use and occupancy.
8.7. Dispositions Not Authorized. No Grantor is authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1.5 and
notwithstanding any course of dealing between any Grantor and the Agent or other
conduct of the Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in Section 4.1.5) shall be binding upon the
Agent or the Lenders unless such authorization is in writing signed by the Agent
with the consent or at the direction of the Required Lenders.
8.8. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of each Grantor, the
Agent and the Lenders and their respective successors and assigns, except that
no Grantor shall have the right to assign its rights or delegate its obligations
under this Security Agreement or any interest herein, without the prior written
consent of the Agent.
8.9. Survival of Representations. All representations and warranties of
each Grantor contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
8.10. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantors, together with interest and penalties,
if any. The Grantors shall reimburse the Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of
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the Agent) paid or incurred by the Agent in connection with the preparation,
execution, delivery, administration, collection and enforcement of this Security
Agreement and in the audit, analysis, administration, collection, preservation
or sale of the Collateral (including the expenses and charges associated with
any periodic or special audit of the Collateral). Any and all costs and expenses
incurred by any Grantor in the performance of actions required pursuant to the
terms hereof shall be borne solely by such Grantor.
8.11. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.12. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.
8.13. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantors and the Agent relating to the Collateral.
8.14. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8.15. Distribution of Reports. Each Grantor authorizes the Agent, as
the Agent may elect in its sole discretion, to discuss with and furnish to its
Affiliates and to the Lenders or to any other person or entity having an
interest in the Secured Obligations (whether as a guarantor, pledgor of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to any Grantor whether such information was
provided by such Grantor or prepared or obtained by the Agent. Neither the Agent
nor any of its employees, officers, directors or agents makes any representation
or warranty regarding any audit reports or other analyses of the Grantors'
condition which the Agent may in its sole discretion prepare and elect to
distribute, nor shall the Agent or any of its employees, officers, directors or
agents be liable to any person or entity receiving a copy of such reports or
analyses for any inaccuracy or omission contained in or relating thereto.
8.16. Indemnity. Each Grantor hereby agrees to indemnify the Agent and
the Lenders, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Security Agreement, or the manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not
discoverable by the Agent or the Lenders or the Grantors, and any claim for
patent, trademark or copyright infringement).
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ARTICLE IX
NOTICES
9.1. Sending Notices. All notices, requests and other communications
to the Grantors, the Agent or the Lenders hereunder shall be in writing or by
telecopy, and shall be sufficiently given to the Agent, the Lenders or the
Grantors if addressed or delivered to them at, in the case of the Borrower, the
Agent and the Lenders, their respective addresses and telecopier numbers
specified in Article XIII of the Credit Agreement, in the case of UST at the
address and telecopier number set forth on the signature page hereto and, in the
case of any other Grantors, at their respective addresses and telecopier numbers
specified in the instruments pursuant to which such Person becomes an Additional
Grantor.
9.2. Change in Address for Notices. Each of the Grantors, the Agent
and the Lenders may change the address for service of notice upon it by a notice
in writing to the other parties.
ARTICLE X
THE AGENT
Bank One, NA has been appointed Agent for the Lenders hereunder
pursuant to Article X of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred
upon the Agent hereunder is subject to the terms of the delegation of authority
made by the Lenders to the Agent pursuant to the Credit Agreement, and that the
Agent has agreed to act (and any successor Agent shall act) as such hereunder
only on the express conditions contained in such Article X. Any successor Agent
appointed pursuant to Article X of the Credit Agreement shall be entitled to all
the rights, interests and benefits of the Agent hereunder.
ARTICLE XI
ADDITIONAL GRANTORS
In the event that any Subsidiary of the Borrower is required, under the
terms of the Credit Agreement or otherwise, to grant a security interest in its
Collateral, such Subsidiary shall become a Grantor hereunder and shall be bound
by all of the terms and conditions hereof, upon the delivery to the Agent of an
executed counterpart of a Supplement to this Security Agreement in the form of
Exhibit G attached hereto.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Borrower, UST and the Agent have executed this
Security Agreement as of the date first above written.
XETA CORPORATION, an Oklahoma corporation
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------
Title: VP Finance
------------------------------
U. S. TECHNOLOGIES SYSTEMS, INC., a
Missouri corporation
By: /s/ XXX X. XXXXX
---------------------------------
Name: Xxx X. Xxxxx
-------------------------------
Title: President
------------------------------
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention:
---------------------------
Telephone: (000) 000-0000
FAX: (000) 000-0000
BANK ONE, OKLAHOMA, NA,
as Agent
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------
Title: Vice President
------------------------------
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