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EXHIBIT 10.22
SUBSIDIARY SECURITY AGREEMENT
BOWIE RESOURCES, LIMITED
THIS SECURITY AGREEMENT (this "Agreement") is made as of November 11,
1997 by Bowie Resources, Limited, a Colorado corporation ("Debtor"), in favor of
AEI Holding Company, Inc., a Delaware corporation ("Secured Party").
W I T N E S S E T H:
WHEREAS, Debtor and The Provident Bank, an Ohio banking corporation
("Provident") entered into a Loan and Security Agreement dated as of June 17,
1997 (the "Provident Security Agreement"), pursuant to which Provident made
loans to Debtor (the "Provident Loan") and funds were advanced to Debtor
pursuant to: (i) that certain term loan promissory note dated June 17, 1997 and
executed by Debtor in the original principal amount of $12,000,000 payable to
the order to Provident (the "Provident Term Loan Note"); (ii) that certain
revolving loan promissory note dated June 17, 1997 and executed by Debtor in the
original principal amount of $3,000,000 payable to the order to Provident (the
"Provident Revolving Loan Note"); (iii) that certain letter of credit promissory
note dated June 17, 1997 and executed by Debtor in the original principal amount
of $500,000 payable to the order to Provident (the "Provident Letter of Credit
Note" and collectively with the Provident Term Loan Note, the Provident
Revolving Loan Note, the "Provident Notes"); and
WHEREAS, pursuant to an Assignment of Note and Liens of even date
herewith, the Provident Notes were assigned to Secured Party;
WHEREAS, the Provident Notes were renewed and extended by a single
promissory note of even date herewith from Debtor to Secured Party in the
original principal amount of $15,500,000 (the "Intercompany 15.5 Million Note");
WHEREAS, Debtor has executed a promissory note of even date herewith
payable to the order of the Secured Party in the original principal amount of
$44,500,000 (the "Intercompany 44.5 Million Note" and together with the Secured
Intercompany Note, the "Intercompany Notes").
WHEREAS, it is a condition precedent to Secured Party's obligations to
advance funds pursuant to the Intercompany Notes that Debtor shall execute and
deliver to Secured Party an renewal, amendment and restatement of the Provident
Security Agreement;
WHEREAS, Secured Party owns seventy-seven and one-half percent (77.5%)
of the capital stock of Debtor;
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WHEREAS, the board of directors of Debtor has determined that Debtor's
execution, delivery and performance of this Agreement may reasonably be expected
to benefit Debtor, directly or indirectly, and is in the best interests of
Debtor;
NOW, THEREFORE, in consideration of the premises and in order to induce
Secured Party to extend such credit under the Intercompany Notes, Debtor hereby
agrees with Secured Party, for the benefit of Secured Party, as follows:
ARTICLE I
Definitions and References
Section 1.1. General Definitions. As used herein, the terms
"Agreement", "Debtor", "Intercompany Notes", "Provident", "Provident Security
Agreement", "Provident Loan", "Provident Term Loan Note", "Provident Revolving
Loan Note", "Provident Letter of Credit Note", "Provident Notes", "Intercompany
15.5 Million Note", "Secured Party" and "Intercompany 44.5 Million Note" shall
have the meanings indicated above, and the following terms shall have the
following meanings:
"Collateral" means all property, of whatever type, which is described
in Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.
"Commitment" means the agreement or commitment by Secured Party to make
loans or otherwise extend credit to Debtor under any agreement, commitment,
statement of terms or other document contemplating the making of loans or
advances or other extension of credit by Secured Party to or for the account of
Debtor which is now or at any time hereafter intended to be secured by the
Collateral under this Agreement.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing inventory, equipment, or other
goods.
"Equipment" means all equipment (as defined in the UCC) in whatever
form, wherever located, and whether now or hereafter existing, and all parts
thereof, all accessions thereto, and all replacements therefor.
"Event of Default" means any of the following: (i) the failure of
Debtor to pay any indebtedness owing under the Intercompany Notes when due, and
(ii) the occurrence of an Event of Default under that certain Credit Agreement
dated as of November 11, 1997 among Secured Party, NationsBank of Texas, N.A.,
as Agent, and certain lenders.
"General Intangibles" means all general intangibles (as defined in the
UCC) of any kind (including choses in action, tax refunds, insurance proceeds,
and contract rights), and all instruments, security agreements, leases,
contracts, and other rights (except those constituting
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Receivables, Documents, or Instruments) to receive payments of money or the
ownership or possession of property. The General Intangibles include, among
other items and all Intellectual Property.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (as each is defined in" the UCC).
"Intellectual Property" means any Patents, Patent Licenses, Trademarks,
and Trademark Licenses.
"Inventory" means all inventory (as defined in the UCC) in all of its
forms, wherever located and whether now or hereafter existing, including (a) all
movable property and other goods held for sale or lease, all movable property
and other goods furnished or to be furnished under contracts of service, all raw
materials and work in process, and all materials and supplies used or consumed
in a business, including but not limited to all coal and other minerals after
extraction, all stockpiles thereof and related products, (b) all movable
property and other goods which are part of a product or mass, (c) all movable
property and other goods which are returned to or repossessed by the seller,
lessor, or supplier thereof, (d) all goods and substances in which any of the
foregoing is commingled or to which any of the foregoing is added, and (e) all
accessions to, products of, and documents for any of the foregoing.
"Intercompany Notes" means the Intercompany 15.5 Million Note and the
Intercompany 44.5 Million Note.
"Investment Property" means all "certificated securities",
"uncertificated securities", "security entitlements", "security accounts",
"commodity contracts" or "commodity accounts" (as each is defined in the UCC).
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure indebtedness of any kind which is owed
to him or any other arrangement with such creditor which provides for the
payment of such indebtedness out of such property or assets or which allows him
to have such indebtedness satisfied out of such property or assets prior to the
general creditors of any owner thereof, including without limitation any lien,
mortgage, security interest, pledge, deposit, production payment, rights of a
vendor under any title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or materialman's lien, or
any other charge or encumbrance for security purposes, whether arising by law or
agreement or otherwise, but excluding any right of offset which arises without
agreement in the ordinary course of business. "Lien" also means any filed
financing statement, any registration with an issuer of uncertificated
securities, or any other arrangement which would serve to perfect a Lien
described in the preceding sentence, regardless of whether such financing
statement is filed, such registration is made, or such arrangement is undertaken
before or after such Lien exists.
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"Obligation Documents" means the Intercompany Notes and all other
documents and instruments under, by reason of which, or pursuant to which any or
all of the Secured Obligations are evidenced, governed, secured, or otherwise
dealt with, and all other agreements, certificates, and other documents,
instruments and writings heretofore or hereafter delivered in connection
herewith or therewith.
"Other Liable Party" means any Person, other than Debtor, who may now
or may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Secured Party or Secured Party a Lien upon any property as security for the
Secured Obligations.
"Patent License" means any license or other agreement, whether now or
hereafter in existence, under which is granted or authorized any right with
respect to any Patent or any invention now or hereafter in existence, whether
patentable or not, whether a patent or application for patent is in existence on
such invention or not, and whether a patent or application for patent on such
invention may come into existence.
"Patents" means all the following: (a) all letters patent and design
letters patent of the United States or any other country and all applications
for letters patent and design letters patent of the United States or any other
country, including applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
other country, or any political subdivision thereof. (b) all reissues,
divisions, continuations, continuations-in-part, renewals and extensions
thereof, (c) all claims for, and rights to xxx for, past or future infringements
of any of the foregoing, and (d) all income, royalties, damages and payments now
or hereafter due or payable with respect to any of the foregoing, including
damages and payments for past or future infringements thereof.
"Perfection Certificate" means a certificate providing information
about the Collateral, appropriately completed to the satisfaction of Secured
Party and duly executed by the indicated officer or officers of Debtor.
"Person" means an individual, corporation, partnership, association,
joint stock company, trust, unincorporated organization or joint venture, or a
court or governmental unit or any agency or subdivision thereof, or any other
legally recognizable entity.
"Proceeds" means, with respect to any property of any kind, all
proceeds of, and all other profits, products, rentals or receipts, in whatever
form, arising from any sale, exchange, collection, lease, licensing or other
disposition of, distribution in respect of, or other realization upon, such
property, including all claims against third parties for loss of, damage to or
destruction of, or for proceeds payable under (or unearned premiums with respect
to) insurance in respect of, such property (regardless of whether Secured Party
is named a loss payee thereunder), and any payments paid or owing by any third
party under any indemnity, warranty, or guaranty with respect to such property,
and any condemnation or requisition payments with respect to such property, in
each case whether now existing or hereafter arising.
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"Receivables" means (a) all accounts (as defined in the UCC) and all
other rights to payment for goods or other personal property which have been (or
are to be) sold, leased, or exchanged or for services which have been (or are to
be) rendered, regardless of whether such accounts or other rights to payment
have been earned by performance and regardless of whether such accounts or other
rights to payment are evidenced by or characterized as accounts receivable,
contract rights, book debts, notes, drafts or other obligations of indebtedness,
(b) all Documents and Instruments of any kind relating to such accounts or other
rights to payment or otherwise arising out of or in connection with the sale,
lease or exchange of goods or other personal property or the rendering of
services, (c) all rights in, to, or under all security agreements, leases and
other contracts securing or otherwise relating to any such accounts, rights to
payment, Documents, or Instruments, (d) all rights in, to and under any purchase
orders, service contracts, or other contracts out of which such accounts and
other rights to payment arose (or will arise on performance), and (e) all rights
in or pertaining to any goods arising out of or in connection with any such
purchase orders, service contracts, or other contracts, including rights in
returned or repossessed goods and rights of replevin, repossession, and
reclamation.
"Related Person" means Debtor, each Subsidiary of Debtor, and each
Other Liable Party.
"Secured Obligations" has the meaning given such term in Section 2.2.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Trademark License" means any license or agreement, whether now or
hereafter in existence, under which is granted or authorized any right to use
any Trademark.
"Trademarks" means all of the following: (a) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, brand names, trade dress, prints and
labels on which any of the foregoing have appeared or appear, package and other
designs, and any other source or business identifiers, and general intangibles
of like nature, and the rights in any of the foregoing which arise under
applicable law, (b) the goodwill of the business symbolized thereby or
associated with each of them, (c) all registrations and applications in
connection therewith, including registrations and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or other country, or any political subdivision
thereof, (d) all reissues, extensions and renewals thereof, (e) all claims for,
and rights to xxx for, past or future infringements of any of the foregoing, and
(f) all income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including damages and payments for past or
future infringements thereof.
"UCC" means the Uniform Commercial Code in effect in the State of
Colorado on the date hereof.
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Section 1.2. Other Definitions. All terms used in this Agreement which
are defined in the UCC and not otherwise defined herein shall have the same
meanings herein as set forth therein, except where the context otherwise
requires.
Section 1.3. Attachments. All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but not
limited to, references in Section 2.1) also refer to and include all renewals,
extensions, amendments, modifications, supplements or restatements of any such
agreement, instrument or document, provided that nothing contained in this
Section shall be construed to authorize any Person to execute or enter into any
such renewal, extension, amendment, modification, supplement or restatement.
Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Section" and "this subsection" and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs. The word "or" is
not exclusive, and the word "including" (in all of its forms) means "including
without limitation". Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.
ARTICLE II
Security Interest
Section 2.1. Grant of Security Interest. As collateral security for all
of the Secured Obligations, Debtor hereby pledges and assigns to Secured Party
and grants to Secured Party a continuing security interest, for the benefit of
Secured Party, in and to all right, title and interest of Debtor in and to any
and all of the following property, whether now owned or existing or hereafter
acquired or arising and regardless of where located; provided however, that with
respect to the following property in which Debtor has granted to Coors Energy
Company a security interest under the Deed of Trust to Public Trustee, Mortgage,
Security Agreement, Assignment of Production and Proceeds, Financing Statement
and Fixture Filing dated February 10, 1995 (the "Coors Deed of Trust"), the
security interest granted to Secured Party shall apply only to Secured
Obligations owing under or with respect to the Bowie 15.5 Million Note up to a
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maximum total amount of Nineteen Million Dollars ($19,000,000) and such security
interest shall be in accordance with and subject to the terms of the
Intercreditor Agreement dated as of June 27, 1997, among Debtor, Coors Energy
Company and Provident Bank, as assigned (the "Intercreditor Agreement"):
(a) all Receivables.
(b) all General Intangibles.
(c) all Documents.
(d) all Instruments.
(e) all Inventory.
(f) all Investment Property.
(g) all Equipment.
(h) The Collateral Account and the Lockbox, all cash deposited therein
from time to time, and all Liquid Investments referred to in Section 4.1(e).
(i) All books and records (including, without limitation, customer
lists, marketing information, credit files, price lists, operating records,
vendor and supplier price lists, sales literature, computer software, computer
hardware, computer disks and tapes and other storage media, printouts and other
materials and records) of Debtor pertaining to any of the Collateral.
(j) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.
(k) All Proceeds of any and all of the foregoing Collateral.
In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
howsoever Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
Section 2.2. Secured Obligations Secured. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising; provided however, that the security interest in
the Collateral in which Coors Energy Company has a security interest under the
Coors Deed of Trust shall secure only the Secured Obligations under the Bowie
15.5 Million Note.
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(a) Intercompany Notes Indebtedness. The payment by Debtor, when due
and payable, of all amounts from time to time owing by Debtor under or in
respect of the Intercompany Notes or any of the other Obligation Documents to
which Debtor is a party, and the due performance by Debtor of all of its other
respective obligations under or in respect of the Obligation Documents.
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(b) Other Indebtedness. All loans and future advances made by Secured
Party to Debtor and all other debts, obligations and liabilities of every kind
and character of Debtor now or hereafter existing in favor of Secured Party
whether such debts, obligations or liabilities be direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether originally payable
to Secured Party or to a third party and subsequently acquired by Secured Party
and whether such debts, obligations or liabilities are evidenced by notes, open
account, overdraft, endorsement, security agreement, guaranty or otherwise (it
being contemplated that Debtor may hereafter become indebted to Secured Party in
further sum or sums but Secured Party shall have no obligation to extend further
indebtedness by reason of this Agreement).
(c) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of or substitutions for any of the foregoing.
(d) Performance. The due performance and observance by Debtor of all of
its other obligations from time to time existing under or in respect of any of
the Obligation Documents.
As used herein, the term "Secured Obligations" refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor.
ARTICLE III
Representations, Warranties and Covenants
Section 3.1. Representations and Warranties. Debtor hereby represents
and warrants to Secured Party as follows:
(a) Ownership Free of Liens. Debtor has good and marketable title to
the Collateral, free and clear of all Liens, encumbrances or adverse claims
except for the security interest created by this Agreement and except for the
security interest existing under the Coors Deed of Trust. No effective financing
statement or other registration or instrument similar in effect covering all or
any part of the Collateral is on file in any recording office except any which
have been filed in favor of Secured Party relating to this Agreement and any
which have been filed to perfect or protect any Permitted Lien except for the
Coors Deed of Trust. None of the Collateral is in the possession of any Person
other than Debtor or Secured Party, except for Collateral being transported in
the ordinary course of business.
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(b) No Conflicts or Consents. Neither the ownership or the intended use
of the Collateral by Debtor, nor the grant of the security interest by Debtor to
Secured Party herein, nor the exercise by Secured Party of its rights or
remedies hereunder, will (i) conflict with any provision of (a) any domestic or
foreign law, statute, rule or regulation, (b) the articles or certificate of
incorporation, charter or bylaws of Debtor, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon Debtor, or (ii) result in
or require the creation of any Lien, charge or encumbrance upon any assets or
properties of Debtor or of any Related Person. Except as expressly contemplated
in the Obligation Documents, no consent, approval, authorization or order of,
and no notice to or filing with any court, governmental authority, or third
party is required in connection with the grant by Debtor of the security
interest herein, or the exercise by Secured Party of its rights and remedies
hereunder.
(c) Security Interest. Subject to the Intercreditor Agreement, Debtor
has and will have at all times full right, power and authority to grant a
security interest in the Collateral to Secured Party as provided herein, free
and clear of any Lien, adverse claim, or encumbrance. This Agreement creates a
valid and binding security interest in favor of Secured Party in the Collateral,
which security interest secures all of the Secured Obligations.
(d) Perfection Certificate. Debtor has previously completed and
delivered the Perfection Certificate to Secured Party. The Perfection
Certificate as so delivered is true, correct and complete.
(e) Receivables. Each Receivable included within the Collateral
represents the valid and legally binding indebtedness of a bona fide account
debtor arising from the sale or lease by Debtor of goods or the rendition by
Debtor of services, subject to no contra-accounts, setoffs, defenses,
counterclaims, discounts, allowances, rebates, credits or adjustments by or
available to account debtors obligated on such Receivable, except for
Receivables of Debtor which do not in the aggregate exceed five percent (5%) of
the aggregate face amount of all of Debtor's Receivables. No material amount of
Debtor's Receivables is otherwise doubtful of collection except as has been
disclosed to Secured Party in writing.
(f) General Intangibles. Each General Intangible included within the
Collateral which is material to Debtor's business represents the valid and
legally binding obligation of each other Person who is a party thereto or who is
otherwise stated to be obligated thereunder, subject to no contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated thereon, except for
those which (i) in the case of General Intangibles under which money is owing to
Debtor, do not in the aggregate exceed five percent (5%) of the aggregate face
amount of all such General Intangibles, and (ii) in the case of other General
Intangibles, do not materially impair the value to Debtor or the enforcement by
Debtor of such General Intangibles.
(g) Intellectual Property. There is no Intellectual Property included
within the Collateral which is material to Debtor's business.
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(h) Documents and Instruments. All Documents and Instruments included
within the Collateral are valid and genuine. Any such Document or Instrument has
only one original counterpart which constitutes collateral within the meaning of
the UCC or the law of any applicable jurisdiction, and all such original
counterparts (other than checks delivered in payment of Receivables in the
ordinary course of business) have been delivered into the possession of Secured
Party.
(i) Goods. None of the Collateral which constitutes goods (i) is
covered by any Document (other than Documents which are subject hereto and have
been delivered to Secured Party), (ii) is subject to any landlord's lien or
similar Lien, except statutory liens covering equipment or other goods in favor
of the owner of real property on which such equipment or other goods is located
(iii) has been related to, attached to, or used in connection with any real
property so as to constitute a fixture upon such real property (except for real
property which is subject to a Lien in favor of Secured Party), (iv) is now kept
or is intended to be kept at any location other than as set forth in the
Perfection Certificate (except for goods in transit in the ordinary course of
Debtor's business), (v) is installed in or affixed to other goods so as to be an
accession to such other goods (unless such other goods are included in the
Collateral), or (vi) has been produced in violation of the Fair Labor Standards
Act, as amended. Secured Party will keep or cause the Collateral to be kept
insured by financially sound and reputable insurers.
(k) Investment Property. Debtor has delivered to Secured Party all
Certificates, instruments, and writings evidencing Investment Property included
within the Collateral. All such certificates, instruments, and writings are
valid and genuine and have not been altered.
Section 3.2. General Covenants Applicable to All Collateral. Unless
Secured Party shall otherwise consent in writing, Debtor will at all times
comply with the covenants contained in this Section 3.2 from the date hereof and
so long as any part of the Secured Obligations or the Commitment is outstanding.
(a) Change of Name, Location, or Structure; Additional Filings. Debtor
recognizes that financing statements pertaining to the Collateral have been or
may be filed where Debtor maintains any Collateral, has its records concerning
any Collateral or has its chief executive office or chief place of business.
Without limitation of any other covenant herein, Debtor will not cause or permit
any change to be made in its name, identity or corporate or partnership
structure, or any change to be made to a jurisdiction other than as represented
in Section 3.1 hereof in (i) the location of any Collateral, (ii) the location
of any records concerning any Collateral or (iii) in the location of Debtor's
chief executive office or principal place of business, unless Debtor shall have
first (1) notified Secured Party of such change at least twenty (20) days prior
to the effective date of such change, (2) taken all action requested by Secured
Party (under the following subsection (b) or otherwise) for the purpose of
further confirming and protecting Secured Party's security interests and rights
under this Agreement and the perfection and priority thereof, and (3) if
requested by Secured Party, provided to Secured Party a legal opinion to its
satisfaction confirming that such change will not adversely affect in any way
Secured Party's
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security interests and rights under this Agreement or the perfection or priority
thereof. In any notice furnished pursuant to this subsection, Debtor will
expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for
the purposes of continuing perfection of Secured Party's security interest in
the Collateral.
(b) Further Assurances. Debtor will, at its expense as from time to
time requested by Secured Party, promptly execute and deliver all further
instruments, agreements, filings and registrations, and take all further action,
in order: (i) to confirm and validate this Agreement and Secured Party's rights
and remedies hereunder, (ii) to correct any errors or omissions in the
descriptions herein of the Secured Obligations or the Collateral or in any other
provisions hereof, (iii) to perfect, register and protect the security interests
and rights created or purported to be created hereby or to maintain or upgrade
in rank the priority of such security interests and rights, (iv) to enable
Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, or (v) to otherwise give Secured Party the full
benefits of the rights and remedies described in or granted under this
Agreement. As part of the foregoing Debtor will, whenever requested by Secured
Party (1) execute and file any financing statements, continuation statements,
and other filings or registrations relating to Secured Party's security
interests and rights hereunder, and any amendments thereto, and (2) xxxx its
books and records relating to any Collateral to reflect that such Collateral is
subject to this Agreement and the security interests hereunder. To the extent
requested by Secured Party from time to time, Debtor will obtain from any
material account debtor or other obligor on the Collateral the acknowledgment of
such account debtor or obligor that such Collateral is subject to this
Agreement.
(c) Inspection of Collateral. Debtor will keep adequate records
concerning the Collateral and will permit Secured Party and all representatives
appointed by Secured Party, including independent accountants, agents,
attorneys, appraisers and any other persons, to inspect any of the Collateral
and the books and records of or relating to the Collateral at any time during
normal business hours, and to make photocopies and photographs thereof, and to
write down and record any information which such representatives obtain;
provided that such actions do not unreasonably interfere with Debtor's business.
(d) Information. Upon the reasonable request from time to time by
Secured Party, Debtor will furnish to Secured Party (i) any information
concerning any covenant, provision or representation contained herein or any
other matter in connection with the Collateral or Debtor's business, properties,
or financial condition, and (ii) statements and schedules identifying and
describing the Collateral and other reports and information requested in
connection with the Collateral, all in reasonable detail.
(e) Ownership, Liens, Possession and Transfers. Debtor will maintain
good and marketable title to all Collateral, free and clear of all Liens,
encumbrances or adverse claims except for Permitted Liens, the security interest
created by this Agreement and the security interest created under the Coors Deed
of Trust, and Debtor will not grant or allow any such Liens, encumbrances or
adverse claims to exist. Debtor will not grant or allow to remain in
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effect, and Debtor will cause to be terminated, any financing statement or other
registration or instrument similar in effect covering all or any part of the
Collateral, except any which have been filed in favor of Secured Party relating
to this Agreement and any which have been filed to perfect or protect any
Permitted Lien and any which has been filed in favor of Coors Energy Company in
connection with the security interest granted under the Coors Deed of Trust.
Debtor will defend Secured Party's right, title and special property and
security interest in and to the Collateral against the claims of any Person,
except that such defense against the claims of Coors Energy Company shall be
subject to the terms of the Intercreditor Agreement. Except as expressly allowed
in Section 3.3 below for Inventory and Equipment, Debtor (i) will insure that
all of the Collateral -- whether goods, Documents, Instruments, or otherwise --
is and remains in the possession of Debtor or Secured Party (or a bailee
selected by Secured Party who is holding such Collateral for the benefit of
Secured Party), except for goods being transported in the ordinary course of
business, and (ii) will not sell, assign (by operation of law or otherwise),
transfer, exchange, lease or otherwise dispose of any of the Collateral.
(f) Impairment of Security Interest. Debtor will not take or fail to
take any action which would in any manner impair the value or enforceability of
Secured Party's security interest in any Collateral.
(g) Agreement to Deliver Security Documents. Debtor agrees to deliver,
to further secure the Secured Obligations whenever requested by Secured Party in
its sole and absolute discretion, deeds of trust, mortgages, chattel mortgages,
security agreements, and financing statements in form and substance satisfactory
to Secured Party for the purpose of granting, confirming, and perfecting first
and prior liens or security interests in any real or personal property now owned
or hereafter acquired by Debtor.
Section 3.3. Covenants for Specified Types of Collateral. Unless
Secured Party shall otherwise consent in writing, Debtor will at all times
comply with the covenants contained in this Section 3.3 from the date hereof and
so long as any part of the Secured Obligations or the Commitment is outstanding.
(a) Receivables. Debtor will, except as otherwise provided in Sections
4.1(d) or 4.2(a), collect at its own expense all amounts due or to become due
under each Receivable which is included within the Collateral. In connection
with such collections, Debtor may (and, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as Debtor or Secured Party may
deem necessary or advisable to enforce collection or performance of each such
Receivable. Except for actions and omissions in the ordinary course of business
which do not in the aggregate cause losses or reductions in excess of five
percent (5%) of the aggregate face amount of all such Receivables outstanding at
any time, Debtor (i) will duly perform and cause to be performed all of its
obligations with respect to the goods or services, the sale or lease or
rendering of which gave rise or will give rise to each such Receivable, and (ii)
will not (whether through failure to duly perform its obligations under any
contracts, instruments, and agreements which are related to any such Receivable,
or by any written instrument, or otherwise) take or allow any action or omission
which causes any such Receivable to become subject to any
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contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to account debtors obligated on
such Receivable, unless such action involves a good faith contest (promptly
instituted and diligently concluded) to the validity of amounts claimed to be
owed to another Person.
(b) General Intangibles. Debtor will, except as otherwise provided in
Sections 4.1(e) or 4.2(a), collect at its own expense all amounts due or to
become due under each General Intangible included within the Collateral. In
connection with such collections, Debtor may (and, at Secured Party's direction,
will) take such action (not otherwise forbidden hereunder) as Debtor or Secured
Party may deem necessary or advisable to enforce collection or performance of
each such General Intangible. Unless the failure to do so is the result of a
good faith contest (promptly and diligently concluded) of the validity of such
obligations, Debtor will duly perform and cause to be performed all of its
obligations under any contracts, instruments, and agreements which are, or which
are related to, any material General Intangibles of Debtor. Debtor will not
(whether through failure to duly perform its obligations under any contracts,
instruments, and agreements which are related to any such General Intangibles,
or by any written instrument, or otherwise) take or allow any action or omission
which causes any such General Intangibles to become subject to any
contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to account debtors obligated on
such General Intangibles, except for those which (i) in the case of such General
Intangibles under which money is owing to Debtor, do not in the aggregate exceed
five percent (5%) of the aggregate face amount of all such General Intangibles,
and (ii) in the case of other General Intangibles included within the
Collateral, do not materially impair the value or enforcement of such General
Intangibles.
(c) Intellectual Property. Debtor will maintain and protect the
validity and enforceability of all Intellectual Property included within the
Collateral which is material to Debtor's business. Debtor will defend and
protect such Intellectual Property and its rights thereunder against any
infringement, dilution, or misappropriation and will defend any claim or
administrative or arbitral challenge that questions the validity or
enforceability of such Intellectual Property, Debtor's purported rights therein
and thereunder, or Debtor's rights to register or patent the same or to use and
practice the same in its business. Debtor will give Secured Party notice of any
proceeding in which such defense is being carried on. Debtor will diligently
prosecute and maintain all applications and registrations for any such
Intellectual Property, and Debtor will notify Secured Party whenever it learns
that any application or registration relating to any such Intellectual Property
has been (or is alleged to have been) abandoned, dedicated or otherwise
terminated. At least thirty days prior to filing any application for
registration of any Intellectual Property (or any similar request) with the
United States Patent and Trademark Office, or any similar office or agency of
the United States, any State thereof or other country, or any political
subdivision thereof, Debtor will give Secured Party notice of such intended
filing and will, upon Secured Party's request, execute, deliver and file any
agreements, instruments, registrations and filings which Secured Party may
request to confirm Secured Party's security interest therein and to put such
security interest of record in such office. Debtor hereby appoints Secured
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Party as its agent and attorney in fact to do the same, and hereby ratifies and
confirms all actions of Secured Party as such agent and attorney in fact, and
hereby acknowledges that such agency and power of attorney are irrevocable and
coupled with an interest.
(d) Documents and Instruments. Debtor will at all times cause any
Documents or Instruments which are included within the Collateral to be valid
and genuine. Debtor will cause all Instruments included within the Collateral to
have only one original counterpart. Upon request by Secured Party, Debtor will
promptly deliver to Secured Party all originals of Documents or Instruments
which are included within the Collateral. Debtor will not (whether through
failure to duly perform its obligations under any contracts, instruments, and
agreements which are related to any Documents or Instruments which are included
within the Collateral, or by any written instrument, or otherwise) take or allow
any action or omission which causes any Documents or Instruments which are
included within the Collateral to become subject to any contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to the Persons obligated thereon. Upon request by
Secured Party, Debtor will xxxx each chattel paper which is included within the
Collateral with a legend indicating that such chattel paper is subject to the
security interest granted by this Agreement.
(e) Inventory. Debtor will maintain, preserve, protect and store all
Inventory included within the Collateral in good condition, repair and working
order and in a manner which will not make void or cancelable any insurance with
respect to such Collateral. Debtor will promptly furnish to Secured Party a
statement respecting any loss or damage to any such Inventory with an aggregate
value in excess of $500,000. Except for transportation of Inventory in the
ordinary course of business, Debtor will not allow any such Inventory to be
located in any jurisdiction other than those in which is filed an effective
financing statement which perfects Secured Party's security interest hereunder
in such Inventory. Except for Documents delivered into the possession of Secured
Party, Debtor will not allow any Inventory included within the Collateral to be
covered by any Document. Debtor will not cause or permit the removal of any item
of Inventory from Debtor's possession, control and risk of loss, and Debtor will
not sell, assign (by operation of law or otherwise), transfer, exchange, lease
or otherwise dispose of any Inventory, other than in connection with the
following:
(i) Sales or leases, other than during the continuance of an
Event of Default, of Inventory in the ordinary course of business, and
(ii) Possession of Inventory by Secured Party or by a bailee
selected by Secured Party who is holding such Inventory for the benefit
of Secured Party.
(f) Equipment. Debtor will maintain, preserve, protect and keep all
Equipment included within the Collateral in good condition, repair and working
order and will cause such Equipment to be used and operated in a good and
workmanlike manner, in accordance with applicable law and in a manner which will
not make void or cancelable any insurance with respect to such Equipment. Debtor
will promptly furnish to Secured Party a statement respecting any loss or damage
to any of such Equipment with an aggregate value in excess of $500,000. Except
for transportation of Equipment in the ordinary course of business, Debtor will
not allow any
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Equipment included within the Collateral to be located in any jurisdiction other
than those in which is filed an effective financing statement which perfects
Secured Party's security interest hereunder in such Equipment. Debtor will not
cause or permit the removal of any item of Equipment from Debtor's possession,
control and risk of loss, and Debtor will not sell, assign (by operation of law
or otherwise), transfer, exchange, lease or otherwise dispose of any Equipment,
other than in connection with the following:
(i) Sale or other disposal, other than during the
continuance of an Event of Default, of any item of Equipment (i) in the
ordinary course of business or (ii) which is worn out or obsolete or
which has been replaced by an item of equal suitability and value,
owned by Debtor and made subject to the security interest under this
Agreement, but which is otherwise free and clear of any Liens,
encumbrances or adverse claims, and
(ii) Possession of Equipment by Secured Party or by a bailee
selected by Secured Party who is holding such Equipment for the benefit
of Secured Party.
Debtor will not permit any of the Collateral which constitutes Equipment to at
any time become so related to attached to, or used in connection with any
particular real property so as to become a fixture upon such real property, or
to be installed in or affixed to other goods so as to become an accession to
such other goods unless such other goods are also included in the Collateral.
(g) Certificates of Title. To the extent that there is at any time any
Collateral in which a security interest may be perfected by a notation on the
certificate of title or similar evidence of ownership of such Collateral, Debtor
will:
(i) concurrently with the execution hereof, with respect to
any items of such Collateral with a book value in excess of $25,000 in
which Debtor presently has any interest,
(ii) promptly after the acquisition thereof, with respect to
any items of such Collateral with a book value in excess of $25,000 in
which Debtor hereafter acquires any interest, and
(iii) promptly upon request by Secured Party, with respect to
any other items of such Collateral,
deliver to Secured Party all such certificates of title and similar evidences of
ownership, all applications therefor, and all other documents needed or helpful
in registering Secured Party's security interest in such Collateral on such
certificates of title, other evidences of ownership, and applications and in
otherwise perfecting Secured Party's security interest in such Collateral.
(h) Investment Property.
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(i) Debtor will at all times cause (A) Secured Party to have control
(within the meaning of the UCC) over all Investment Property included
within the Collateral and (B) any certificates, documents, or
instruments evidencing Investment Property included within the
Collateral to be valid and genuine. All instruments and writings
evidencing Investment Property included within the Collateral shall be
delivered to Secured Party concurrently with or prior to the execution
and delivery of this Agreement. ) and
(ii)All instruments and writings evidencing the Investment Property
shall be delivered to Secured Party on or prior to the execution and
delivery of this Agreement. All other instruments and writings
hereafter evidencing or constituting Investment Property shall be
delivered to Secured Party promptly upon the receipt thereof by or on
behalf of Debtor. All such Investment Property shall be held by or on
behalf of Secured Party pursuant hereto and shall be delivered in
suitable form for transfer by delivery with any necessary endorsement
or shall be accompanied by fully executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Secured
Party.
ARTICLE IV.
Remedies, Powers and Authorizations
Section 4.1. Normal Provisions Concerning the Collateral.
(a) Additional Financing Statement Filings. Debtor hereby authorizes
Secured Party to file, without the signature of Debtor where permitted by law,
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Debtor further agrees that a carbon, photographic or
other reproduction of this Agreement or any financing statement describing any
Collateral is sufficient as a financing statement and may be filed in any
jurisdiction by Secured Party.
(b) Power of Attorney. Debtor hereby appoints Secured Party as Debtor's
attorney-in-fact and proxy, with full authority in the place and stead of Debtor
and in the name of Debtor or otherwise, from time to time in Secured Party's
discretion, 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 any action or instrument: (i) to obtain and adjust any insurance
required to be paid to Secured Party pursuant hereto; (ii) 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;
(iii) to receive, indorse and collect any drafts or other Instruments or
Documents; (iv) to enforce any obligations included among the Collateral; and
(v) to file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Debtor or Secured Party with
respect to any of the Collateral. Debtor hereby acknowledges that such power of
attorney and proxy are coupled with an interest, are irrevocable, and are to be
used by Secured Party for the sole benefit of Secured Party.
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(c) Performance by Secured Party. If Debtor fails to perform any
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Secured
Party incurred in connection therewith shall be payable by Debtor under Section
4.5.
(d) Bailees. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of Debtor's agents or processors,
Debtor shall, upon the request of Secured Party, notify such warehouseman,
bailee, agent or processor of Secured Party's rights hereunder and instruct such
Person to hold all such Collateral for Secured Party's account subject to
Secured Party's instructions. (No such request by Secured Party shall be deemed
a waiver of any provision hereof which was otherwise violated by such Collateral
being held by such Person prior to such instructions by Debtor.)
(e) Collection. Secured Party shall have the right at any time, to
notify (or to require Debtor to notify) any and all obligors under any
Receivables, General Intangibles, Instruments, Investment Property or other
rights to payment included among the Collateral of the assignment thereof to
Secured Party under this Agreement and to direct such obligors to make payment
of all amounts due or to become due to Debtor thereunder directly to Secured
Party, any assignee of Secured Party or any person designated by Secured Party
and, upon such notification and at the expense of Debtor and to the extent
permitted by law, to enforce collection of any such Receivables, General
Intangibles, Instruments, Investment Property or other rights to payment and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Debtor could have done. After Debtor receives notice
that Secured Party has given (and after Secured Party has required Debtor to
give) any notice referred to above in this subsection: all amounts and proceeds
(including instruments and writings) received by Debtor in respect of such
Receivables, General Intangibles, Instruments, Investment Property or other
rights to payment upon the occurrence and during the continuance of a Default or
Event of Default shall be received in trust for the benefit of Secured Party
hereunder, shall be segregated from other funds of Debtor and shall be forthwith
paid over to Secured Party in the same form as so received (with any necessary
indorsement) to be, at Secured Party's discretion, either (A) held as cash
collateral and released to Debtor upon the remedy of all Defaults and Events of
Default, or (B) while any Event of Default is continuing, applied as specified
in Section 4.3.
Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) exercise in respect of the Collateral, in addition to any other
rights and remedies provided for herein, under the other Obligation Documents,
or otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral);
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(b) require Debtor to, and Debtor hereby agrees that it will at its
expense and upon request of Secured Party forthwith, assemble all or part of the
Collateral as directed by Secured Party and make it (together with all books,
records and information of Debtor relating thereto) available to Secured Party
at a place to be designated by Secured Party which is reasonably convenient to
both parties;
(c) prior to the disposition of any Collateral, (i) to the extent
permitted by applicable law, enter, with or without process of law and without
breach of the peace, any premises where any of the Collateral is or may be
located, and without charge or liability to Secured Party seize and remove such
Collateral from such premises, (ii) have access to and use the Debtor's books,
records, and information relating to the Collateral, and (iii) store or transfer
any of the Collateral without charge in or by means of any storage or
transportation facility owned or leased by Debtor, process, repair or
recondition any of the Collateral or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate and, in connection with
such preparation and disposition, use without charge any copyright, trademark,
trade name, patent or technical process used by Debtor;
(d) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available judicial
procedure;
(e) dispose of, at its office, on the premises of Debtor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Secured Party's power of sale,
but sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Secured Obligations have been paid and
performed in full), and at any such sale it shall not be necessary to exhibit
any of the Collateral;
(f) buy (or allow one or more of the Secured Parties to buy) the
Collateral, or any part thereof, at any public sale;
(g) buy (or allow one or more of the Secured Parties to buy) the
Collateral, or any part thereof, at any private sale if the Collateral is of a
type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations; and
(h) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Debtor hereby consents to
any such appointment.
Debtor agrees that, to the extent notice of sale shall be required by law, at
least five (5) days' notice to Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
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In addition to the foregoing, if any Event of Default has occurred and is
continuing:
(i) Secured Party may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Patents or Trademarks included in the
Collateral throughout the world for such term or terms, on such
conditions and in such manner as Secured Party shall in its sole
discretion determine;
(ii) Secured Party may (without assuming any obligations or
liability thereunder), at any time and from time to time, in its sole
discretion, enforce (and shall have the exclusive right to enforce)
against any licensee or sublicensee all rights and remedies of Debtor
in, to and under any Patent Licenses or Trademark Licenses which relate
to Patents or Trademarks included in the Collateral and take or refrain
from taking any action under any thereof, and DEBTOR HEREBY RELEASES
SECURED PARTY FROM, AND AGREES TO HOLD SECURED PARTY FREE AND HARMLESS
FROM AND AGAINST, ANY CLAIMS AND EXPENSES ARISING OUT OF ANY LAWFUL
ACTION SO TAKEN OR OMITTED TO BE TAKEN WITH RESPECT THERETO; and
(iii) upon request by Secured Party, Debtor will execute and
deliver to Secured Party a power of attorney, in form and substance
satisfactory to Secured Party, for the implementation of any lease,
assignment, license, sublicense, grant of option, sale or other
disposition of a Patent or Trademark included in the Collateral or any
action related thereto. In the event of any such disposition pursuant
to this Section, Debtor shall supply its know-how and expertise
relating to the manufacture and sale of the products bearing Trademarks
or the products or services made or rendered in connection with
Patents, and its customer lists and other records relating to such
Patents or Trademarks and to the distribution of said products, to
Secured Party.
Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may elect:
(a) To the repayment of the reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by Secured Party in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of Secured Party hereunder, or (iv) the failure of Debtor to perform
or observe any of the provisions hereof;
(b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;
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(c) To the reimbursement of Secured Party for the amount of any
obligations of Debtor or any Other Liable Party paid or discharged by Secured
Party pursuant to the provisions of this Agreement or the other Obligation
Documents, and of any expenses of Secured Party payable by Debtor hereunder or
under the other Obligation Documents;
(d) To the satisfaction of any other Secured Obligations;
(e) By holding the same as Collateral;
(f) To the payment of any other amounts required by applicable law
(including any provision of the UCC); and
(g) By delivery to Debtor or to whoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
Section 4.4. Deficiency. In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation Documents
or (if no interest is so provided) at such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees of
any attorneys employed by Secured Party or Secured Party to collect such
deficiency.
Section 4.5. Indemnity and Expenses. In addition to, but not in
qualification or limitation of, any similar obligations under other Obligation
Documents:
(a) DEBTOR WILL INDEMNIFY SECURED PARTY FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES AND LIABILITIES GROWING OUT OF OR RESULTING FROM THIS AGREEMENT
(INCLUDING ENFORCEMENT OF THIS AGREEMENT), WHETHER OR NOT SUCH CLAIMS, LOSSES
AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR ARISING OUT OF SUCH
INDEMNIFIED PARTY'S OWN NEGLIGENCE, EXCEPT TO THE EXTENT SUCH CLAIMS, LOSSES OR
LIABILITIES ARE PROXIMATELY CAUSED BY SUCH INDEMNIFIED PARTY'S INDIVIDUAL GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(b) Debtor will upon demand pay to Secured Party the amount of any and
all reasonable costs and expenses, including the reasonable fees and
disbursements of Secured Party's counsel and of any experts and agents, which
Secured Party may incur in connection with (i) the transactions which give rise
to this Agreement, (ii) the preparation of this Agreement and the perfection and
preservation of this security interest created under this Agreement, (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Secured
Party hereunder; or (vi) the failure by Debtor to perform or observe any of the
provisions hereof, except expenses resulting from Secured Party's individual
gross negligence or willful misconduct.
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Section 4.6. Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal
right which might otherwise require Secured Party to enforce its rights by
judicial process. In so providing for non-judicial remedies, Debtor recognizes
and concedes that such remedies are consistent with the usage of trade, are
responsive to commercial necessity, and are the result of a bargain at arm's
length. Nothing herein is intended, however, to prevent Secured Party from
resorting to judicial process at its option.
Section 4.7. Other Recourse. Debtor waives any right to require Secured
Party to proceed against any other Person, to exhaust any Collateral or other
security for the Secured Obligations, to have any Other Liable Party joined with
Debtor in any suit arising out of the Secured Obligations or this Agreement, or
to pursue any other remedy in Secured Party's power. Debtor further waives any
and all notice of acceptance of this Agreement and of the creation,
modification, rearrangement, renewal or extension for any period of any of the
Secured Obligations of any Other Liable Party from time to time. Debtor further
waives any defense arising by reason of any disability or other defense of any
Other Liable Party or by reason of the cessation from any cause whatsoever of
the liability of any Other Liable Party. This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased and irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding any death, incapacity, reorganization, or bankruptcy of any
Other Liable Party or any other event or proceeding affecting any Other Liable
Party. Until all of the Secured Obligations shall have been paid in full, Debtor
shall have no right to subrogation and Debtor waives the right to enforce any
remedy which Secured Party has or may hereafter have against any Other Liable
Party, and waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Secured Party. Debtor authorizes
Secured Party, without notice or demand, without any reservation of rights
against Debtor, and without in any way affecting Debtor's liability hereunder or
on the Secured Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Secured
Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Collateral or such other property and direct the order
or manner of sale thereof as Secured Party may in its discretion determine, (c)
renew, extend for any period, accelerate, modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Secured Obligations or other security for the Secured Obligations, (d) waive,
enforce, modify, amend or supplement any of the provisions of any Obligation
Document with any Person other than Debtor, and (e) release or substitute any
Other Liable Party.
Section 4.8. Limitation on Duty of Secured Party in Respect of
Collateral. Beyond the exercise of reasonable care in the custody thereof,
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Secured Party shall be deemed to have exercised reasonable care in the
custody of
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the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by Secured Party in good faith.
Section 4.9. Appointment of Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction, Secured Party
may appoint any bank or trust company or one or more other Persons, either to
act as co-agent or co-agents, jointly with Secured Party, or to act as separate
agent or agents on behalf of the Secured Party, with such power and authority as
may be necessary for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment. In so doing Secured Party may, in
the name and on behalf of Debtor, give to such co-agent or separate agent
indemnities and other protections similar to those provided in Section 4.5.
ARTICLE V.
Miscellaneous
Section 5.1. Notices. All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, by telecopy or telex, by delivery service with proof of delivery, or
by registered or certified United States mail, postage prepaid as follows:
To Secured Party: 0000 X. Xxx Xxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: 606/000-0000
Fax: 606/000-0000
To Debtor: 0000 X. Xxx Xxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: 606/000-0000
Fax: 606/000-0000
Any such notice or communication shall be deemed to have been given (a) in the
case of personal delivery or delivery service, as of the date of first attempted
delivery during normal business hours at the address provided herein, (b) in the
case of telecopy or telex, upon receipt, or (c) in the case of registered or
certified United States mail, three days after deposit in the mail.
Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given and
to the extent specified in such writing.
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Section 5.3. Preservation of Rights. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Secured Obligations. The rights and remedies of Secured Party
provided herein and in the other Obligation Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law or
otherwise. The rights of Secured Party under any Obligation Document against any
party thereto are not conditional or contingent on any attempt by Secured Party
to exercise any of its rights under any other Obligation Document against such
party or against any other Person.
Section 5.4. Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.5. Survival of Agreements. All representations and warranties
of Debtor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Secured Obligations.
Section 5.6. Other Liable Parties. Neither this Agreement nor the
exercise by Secured Party or the failure of Secured Party to exercise any right,
power or remedy conferred herein or by law shall be construed as relieving any
Other Liable Party from liability on the Secured Obligations or any deficiency
thereon.
Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Debtor and its successors and permitted assigns and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its respective successors, transferees and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge, assign or
otherwise transfer any or all of their respective rights under any or all of the
Obligation Documents to any other Person, and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted herein or
otherwise. None of the rights or duties of Debtor hereunder may be assigned or
otherwise transferred without the prior written consent of Secured Party.
Section 5.8. Termination. It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall be
in full force and effect as to subsequent outstanding Secured Obligations. Upon
the satisfaction in full of the Secured Obligations, upon the termination or
expiration of any other commitment of Secured Party to extend credit to Debtor,
and upon written request for the termination hereof delivered by Debtor to
Secured Party, this Agreement and the security interest created hereby shall
terminate and all rights to the Collateral
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shall revert to Debtor. Secured Party will thereafter, upon Debtor's request and
at Debtor's expense, (a) return to Debtor such of the Collateral in Secured
Party's possession as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (b) execute and deliver to Debtor such
documents as Debtor shall reasonably request to evidence such termination.
Section 5.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of COLORADO applicable to
contracts made and to be performed entirely within such state, except as
required by mandatory provisions of law and except to the extent that the
perfection and the effect of perfection or non-perfection of the security
interest created hereby hereunder, in respect of any particular Collateral, are
governed by the laws of a jurisdiction other than the State of Colorado.
Section 5.10. Counterparts. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.12. Amendment and Restatement. This Agreement amends and
restates in its entirety the Provident Security Agreement, and all of the terms
hereof shall supersede the terms and provisions thereof. This Agreement renews
and extends all Liens existing by virtue of the Provident Security Agreement,
but the terms, provisions and conditions of such Liens shall hereafter be
governed in all respects by this Agreement.
THIS WRITTEN SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS 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.
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IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement as
of the date first above written.
BOWIE RESOURCES, LIMITED
By: /s/ Xxxx Xxxx
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Name: Xxxx Xxxx
Title: Secretary
