EXHIBIT 4.8
GRANT PRIDECO CANADA LTD.
as Corporation
and
DEUTSCHE BANK AG, CANADA BRANCH
as Agent
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AMENDED AND RESTATED
SECURITY AGREEMENT
DECEMBER 19, 2002
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TABLE OF CONTENTS
ARTICLE 1
SECURITY
Section 1.1 Terms Incorporated by Reference..................................................................2
Section 1.2 Grant of Security................................................................................3
Section 1.3 Obligations Secured..............................................................................4
Section 1.4 Further Security.................................................................................5
Section 1.5 Attachment.......................................................................................5
Section 1.6 Scope of Security Interest.......................................................................6
Section 1.7 Care and Custody of Collateral...................................................................6
Section 1.8 Corporation Remains Liable.......................................................................7
Section 1.9 Dealings in the Ordinary Course..................................................................7
Section 1.10 Negative Pledge.................................................................................7
Section 1.11 Continuing Security.............................................................................7
Section 1.12 Notification of Account Debtors.................................................................8
Section 1.13 No Release......................................................................................8
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1 Representations and Warranties...................................................................8
Section 2.2 Additional Covenants.............................................................................9
Section 2.3 Special Covenants With Respect to Equipment and Inventory.......................................10
Section 2.4 Special Covenants with respect to Receivables...................................................11
ARTICLE 3
ENFORCEMENT
Section 3.1 Enforcement......................................................................................12
Section 3.2 Remedies.........................................................................................12
Section 3.3 Additional Rights................................................................................13
Section 3.4 Receiver's Powers................................................................................14
Section 3.5 Appointment of Attorney..........................................................................14
Section 3.6 Dealing with the Collateral......................................................................15
Section 3.7 Standards of Sale................................................................................15
Section 3.8 Dealings by Third Parties........................................................................16
ARTICLE 4
GENERAL
Section 4.1 Discharge........................................................................................16
Section 4.2 Loan Agreement Governs...........................................................................17
Section 4.3 Amendments, etc. ................................................................................17
(i)
Section 4.4 Waivers.........................................................................................17
Section 4.5 No Merger.......................................................................................17
Section 4.6 Further Assurances..............................................................................18
Section 4.7 Supplemental Security...........................................................................18
Section 4.8 Notices.........................................................................................18
Section 4.9 Successors and Assigns..........................................................................18
Section 4.10 Gender and Number...............................................................................18
Section 4.11 Headings, etc. .................................................................................18
Section 4.12 Severability....................................................................................19
Section 4.13 Governing Law...................................................................................19
(ii)
AMENDED AND RESTATED
SECURITY AGREEMENT
Amended and Restated
Security Agreement (this "AMENDED AND RESTATED
SECURITY AGREEMENT") dated December 19, 2002 made by Grant Prideco Canada Ltd.
(the "CORPORATION") to and in favour of Deutsche Bank AG, Canada Branch, as
Canadian agent (the "AGENT") for the Canadian Lenders referred to below.
RECITALS:
(a) Pursuant to the Existing Credit Arrangements (as that term is
defined in the Loan Agreement hereinafter defined and referred
to), the Cdn. Lenders (as that term is defined in the Existing
Credit Arrangements) agreed to make certain credit facilities
available to the Corporation;
(b) The Corporation entered into a
security agreement dated April
14, 2000 (the "EXISTING TRANSAMERICA
SECURITY AGREEMENT") in
favour of Transamerica Commercial Finance Corporation, Canada
("TRANSAMERICA") as security for the payment and performance
of the Corporation's obligations to the Cdn. Lenders and
Transamerica under the Existing Credit Arrangements and the
other loan documents entered into in connection with the
Existing Credit Arrangements;
(c) The Canadian Lenders (as that term is defined in the Loan
Agreement hereinafter defined and referred to) have purchased
and assumed all of the rights and obligations of the Cdn.
Lenders relating to the Canadian loan commitments and
outstanding Cdn. Loans (as that term is defined in the Loan
Agreement hereinafter defined and referred to) under the
Existing Credit Arrangements (collectively, the "EXISTING
TRANSAMERICA LOANS") including the rights and obligations of
the Cdn. Lenders under the Existing Transamerica
Security
Agreement;
(d) The Canadian Lenders and the Corporation have amended and
restated terms and conditions of the Existing Transamerica
Loans upon and subject to the terms and conditions contained
in a credit agreement among Grant Prideco, LP, XL Systems,
L.P., Texas Arai, Inc., Tube-Alloy Corporation, Star Operating
Company, ▇▇▇▇-Hycalog Operating, L.P. and the Corporation, as
Borrowers (as that term is defined in the Loan Agreement
hereinafter defined and referred to), with Grant Prideco, LP
acting in its capacity as US Funds Administrator (as that term
is defined in the Loan Agreement hereinafter defined and
referred to) for the Borrowers, and Grant Prideco Canada Ltd.
acting in its capacity as Canadian Funds Administrator (as
that
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term is defined in the Loan Agreement hereinafter defined and
referred to) for the Borrowers, with Grant Prideco, Inc., as a
guarantor, each of the Lenders from time to time party hereto
(as that term is defined in the Loan Agreement hereinafter
defined and referred to), Deutsche Bank Trust Company
Americas, acting in its capacity as contractual representative
for the US Lenders (US Lenders, as that term is defined in the
Loan Agreement hereinafter defined and referred to and
Deutsche Bank Trust Company Americas, acting in its capacity
as contractual representative for the US Lenders, referred to
as the "US AGENT") and the Agent, acting in its capacity as
contractual representative of the Canadian Lenders
Transamerica Business Capital Corporation, as Document Agent
(as that term is defined in the Loan Agreement hereinafter
defined and referred to), ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, as
Co-Syndication Agent (as that term is defined in the Loan
Agreement hereinafter defined and referred to) and ▇▇▇▇▇▇▇
▇▇▇▇▇ Capital, as Co-Syndication Agent (as that term is
defined in the Loan Agreement hereinafter defined and referred
to) (such credit agreement as it may at any time or from time
to time be amended, supplemented, restated or replaced, the
"LOAN AGREEMENT");
(e) The Agent is to hold for its own benefit and is to act as
agent to hold for itself and for the rateable benefit of the
Canadian Lenders any and all security for the payment and
performance of the obligations of the Corporation under the
Loan Agreement and the other Credit Documents (as such term is
defined in the Loan Agreement); and
(f) The Corporation and the Agent have agreed to amend and restate
the terms and conditions of the Existing Transamerica
Security
Agreement subject to the terms and conditions contained in
this Amended and Restated
Security Agreement to provide for
security to and in favour of the Agent for the payment and
performance of the Corporation's obligations to the Canadian
Lenders and the Agent under the Loan Agreement and other
Credit Documents in respect of the Canadian Revolving Loans
(as that term is defined in the Loan Agreement).
In consideration of the foregoing and other good and valuable
consideration (the receipt and adequacy of which are acknowledged), the
Corporation agrees that the Existing Transamerica
Security Agreement is amended
and restated in its entirety as follows:
ARTICLE 1
SECURITY
SECTION 1.1 TERMS INCORPORATED BY REFERENCE
Terms defined in the Personal Property Security Act (
Alberta) (as
amended from time to time, the "PPSA") and used in this Amended and Restated
Security Agreement
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shall have the same meanings attributed to such terms in the PPSA. For all
purposes of this Amended and Restated Security Agreement, capitalized terms
defined in the Loan Agreement and used in this Amended and Restated Security
Agreement and not otherwise defined in this Amended and Restated Security
Agreement shall herein have the meanings provided to those terms in the Loan
Agreement.
SECTION 1.2 GRANT OF SECURITY
Subject to Section 1.6, the Corporation grants to the Agent, for its
own benefit and as agent and for the rateable benefit of the Canadian Lenders, a
security interest in all the Corporation's right, title and interest in and to
any and all of the Corporation's:
(a) accounts due or accruing due and all agreements, books,
accounts, invoices, letters, documents and papers recording,
evidencing or relating thereto including without limiting the
foregoing all contract rights, promissory notes, chattel
paper, tax refunds, rights to receive tax refunds, rights of
indemnification, contribution and subrogation, causes of
action, choses in action, judgments, claims against third
parties of every kind or nature, drafts, acceptances, letters
of credit, rights to receive payments under letters of credit,
book accounts, accounts maintained by the Corporation with any
financial institutions (including, without limitation, the
Canadian Collateral Account (as defined in the Blocked Account
Agreement dated December 19, 2002) and all money, balances,
credits, deposits or other financial assets therein or
represented thereby, all credits and reserves and all other
forms of obligations whatsoever owing to the Corporation, and
all instruments, books, ledgers, files, computer tapes,
programs, discs and software, trade secrets, computer service
contracts and records with respect to any of the foregoing,
together with all right, title, security and guarantees with
respect to any such receivables, including any right of
stoppage in transit, wherever located, whether now or
hereafter acquired and all claims, causes of action or other
rights to enforce or ▇▇▇ for performance (collectively, the
"RECEIVABLES");
(b) inventory, including without limiting the foregoing all
present and future goods intended for sale, lease or other
disposition including, without limitation, all raw materials,
work in process, finished goods and other retail inventory,
goods in the possession of outside processors or other third
parties, consigned goods (to the extent of the consignee's
interest therein), materials and supplies of any kind, nature
or description which are or might be used in connection with
the manufacture, packing, shipping, advertising, selling or
finishing of any such goods, all documents of title or
documents representing the same and all records, files and
writings with respect thereto, wherever located, whether now
or hereafter acquired (collectively, the "INVENTORY");
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(c) machinery, equipment, furniture, fixtures and leasehold
improvements, including, without limitation, conveyors, tools,
materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware (including,
without limitation, central processing units, terminals,
drives, memory units, printers, keyboards, screens,
peripherals and input or output devices), molds, dies, stamps,
and other equipment of every kind and nature and wherever
situated now or hereafter owned by the Corporation or in which
the Corporation may have any interest as lessee or otherwise
(to the extent of such interest), together with all additions
and accessions thereto, all replacements and all accessories
and parts therefor, all manuals, blueprints, know-how,
warranties and records in connection therewith and all rights
against suppliers, warrantors, manufacturers, and sellers or
others in connection therewith (other than equipment that is
subject to a lease which prohibits, or creates a default or
right of termination upon, the assignment of or the granting
of a security interest in or other Lien on the Corporation's
rights thereunder) (collectively, the "EQUIPMENT");
(d) substitutions and replacements of and increases, additions
and, where applicable, accessions to the property described in
Section 1.2(a), (b) and (c) above; and
(e) proceeds in any form derived directly or indirectly from any
dealing with all or any part of the property described in
Section 1.2(a), (b), (c) and (d) above or the proceeds of such
proceeds
(collectively, the "COLLATERAL").
SECTION 1.3 OBLIGATIONS SECURED
(a) The security interest granted hereby (the "SECURITY INTEREST")
secures the payment and performance of all debts, liabilities
and obligations at any time or from time to time due or
accruing due and owing by or otherwise payable by the
Corporation to the Agent or the Canadian Lenders under or
pursuant to the Loan Agreement and any other agreements
executed by the Corporation in connection therewith, including
this Amended and Restated Security Agreement and the Credit
Documents to which the Corporation is a party, with respect to
the Canadian Revolving Loans and including all charges and
fees of the Canadian Lenders and the Agent, whether present or
future, direct or indirect, absolute or contingent, matured or
unmatured, however or wherever incurred, and in any currency,
and whether incurred by the Corporation alone or with another
or others and whether as principal or surety (collectively,
and together with the expenses, costs and charges set out in
Section 1.3(b), herein the
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"OBLIGATIONS"). For greater certainty, Obligations shall not
include any debts, liabilities or obligations payable by the
Corporation with respect to the Canadian Term Loans.
(b) All expenses, costs and charges incurred by or on behalf of
the Agent and the Canadian Lenders in connection with this
Amended and Restated Security Agreement, the Security Interest
or the Collateral, including all legal fees, court costs,
receiver's or agent's remuneration and other expenses of
taking possession of, repairing, protecting, insuring,
preparing for disposition, realizing, collecting, selling,
transferring, delivering or obtaining payment of the
Collateral or other lawful exercises of the powers conferred
by the Loan Agreement, and of taking, defending or
participating in any action or proceeding in connection with
any of the foregoing matters or otherwise in connection with
the Canadian Lenders' or the Agent's interest in any
Collateral shall be added to and form a part of the
Obligations.
SECTION 1.4 FURTHER SECURITY
The Corporation also grants to the Agent, for its own benefit and as
agent for the rateable benefit of the Canadian Lenders, as further security for
all of the Obligations, a security interest in all of its right, title and
interest in and to all property of the Corporation in the possession of or
deposited with or in the custody of the Agent or any Affiliate of the Agent or
any representative, agent or correspondent of the Agent. For purposes of this
Amended and Restated Security Agreement, any property in which the Agent or any
such Affiliate has any security or title retention interest shall be deemed to
be in the custody of the Agent or of such Affiliate.
SECTION 1.5 ATTACHMENT
(a) The Corporation acknowledges that (i) value has been given,
(ii) it has rights in the Collateral (other than
after-acquired Collateral), (iii) it has not agreed to
postpone the time of attachment of the Security Interest, and
(iv)it has received a duplicate original copy of this Amended
and Restated Security Agreement. The Security Interest is
intended to, and shall, attach to the existing Collateral when
the Corporation signs this Amended and Restated Security
Agreement, and to all Collateral subsequently acquired by the
Corporation immediately upon the Corporation acquiring rights
in such Collateral.
(b) If the Corporation acquires Collateral consisting of chattel
paper, instruments, securities or negotiable documents of
title (collectively, "NEGOTIABLE COLLATERAL"), the Corporation
will, upon the Security Interest becoming enforceable and at
the request of the Agent, deliver to the Agent the Negotiable
Collateral and the Corporation shall, at the request of the
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Agent: (i) cause the transfer of the Negotiable Collateral to
the Agent to be registered wherever, in the opinion of the
Agent, such registration may be required or advisable, (ii)
duly endorse the same for transfer in blank or as the Agent
may direct, and (iii) immediately deliver to the Agent any and
all consents or other documents which may be necessary to
effect the transfer of the Negotiable Collateral to the Agent
or any third party.
(c) The Corporation will execute and deliver, at its own expense,
from time to time, amendments to this Amended and Restated
Security Agreement or additional security agreements as may be
required by the Agent.
SECTION 1.6 SCOPE OF SECURITY INTEREST
The Security Interest shall not:
(a) extend or apply to the last day of the term of any lease,
sublease or any agreement therefore applicable to all
Collateral now held or hereafter acquired by the Corporation,
but upon enforcement of the Security Interest, the Corporation
shall thereafter stand possessed of such last day and shall
hold it in trust for the Agent to assign the same to any
person acquiring such term in the course of the enforcement of
the Security Interest; or
(b) extend to, and the Collateral shall not include any agreement,
right, franchise, licence or permit (the "CONTRACTUAL RIGHTS")
to which the Corporation is a party or of which the
Corporation has the benefit, to the extent that the creation
of the Security Interest herein would constitute a breach of
the terms of, or permit any person to terminate, the
Contractual Rights, but the Corporation shall hold its
interest therein in trust for the Agent to assign the same to
any person acquiring all or any portion of the Collateral in
the course of enforcement of the Security Interest.
SECTION 1.7 CARE AND CUSTODY OF COLLATERAL
(a) The Agent shall have no obligation to keep Collateral in its
possession identifiable.
(b) The Agent may, after the Security Interest shall have become
enforceable, (i) notify any person obligated on an account or
on chattel paper or any obligor on an instrument to make
payments to the Agent whether or not the Corporation was
previously making collections on such accounts, chattel paper
or instruments, and (ii) assume control of any proceeds
arising from the Collateral.
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SECTION 1.8 CORPORATION REMAINS LIABLE
Notwithstanding the provisions of this Amended and Restated Security
Agreement: (i) the Corporation shall remain liable to perform all of its duties
and obligations in regard to the Collateral (including, without limitation, all
of its duties and obligations arising under any leases, licenses, permits,
reservations, contracts, agreements, instruments, contractual rights and
governmental orders, authorizations, licenses and permits, if any, now or
hereafter pertaining thereto) to the same extent as if this Amended and Restated
Security Agreement had not been executed; (ii) the exercise by or on behalf of
the Agent of any of its rights and remedies under or in regard to this Amended
and Restated Security Agreement shall not release the Corporation from such
duties and obligations; and (iii) the Agent nor the Canadian Lenders shall have
no liability for such duties and obligations by reason of the execution and
delivery of this Amended and Restated Security Agreement.
SECTION 1.9 DEALINGS IN THE ORDINARY COURSE
Subject to Section 1.10 hereof and until the Security Interest becomes
enforceable, the Corporation may dispose of or deal with the Collateral in the
ordinary course of business and for the purpose of carrying on the same, so that
purchasers thereof or parties dealing with the Corporation take title thereto
free and clear of the Security Interest, provided that such action is not in
breach of any covenant in this Amended and Restated Security Agreement or any
covenant of the Corporation in the Loan Agreement or any of the other Credit
Documents to which the Corporation is a party. In the event of any such
disposition, and provided that such disposition is not made in contravention of
any provision in the Loan Agreement or any of the other Credit Documents to
which the Corporation is a party, the Agent will, at the written request of the
Corporation, release the Security Interest in the Collateral which has been
disposed of pursuant to such disposition.
SECTION 1.10 NEGATIVE PLEDGE
The Corporation shall not, without the prior written consent of the
Agent, or as otherwise permitted by the Loan Agreement, create, issue, incur,
assume, have outstanding or permit to exist, any mortgage, charge, pledge, lien,
assignment by way of security, security interest or other encumbrance on any
part of the Collateral, other than Permitted Liens.
SECTION 1.11 CONTINUING SECURITY
This Amended and Restated Security Agreement shall be a continuing
obligation, shall cover and secure any ultimate balance of the Obligations owing
to the Agent or the Canadian Lenders, and shall be operative and binding
notwithstanding that at any time or times the Obligations may be zero, or that
any payments from time to time may be made to the Agent or the Canadian Lenders,
or any settlements of
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account effected, or any other thing whatsoever done, suffered or permitted, or
any other action short of complete and irrevocable payment of all the
Obligations and any other amounts payable hereunder.
SECTION 1.12 NOTIFICATION OF ACCOUNT DEBTORS
Upon the occurrence and during the continuance of an Event of Default,
the Agent may give notice to any person obligated to the Corporation or other
person liable to the Corporation in respect of a Receivable or intangible to
make all further payments to the Lender, and, upon notice to the Corporation
thereof, any payment or other proceeds of Collateral received by the Corporation
from account debtors or from any other person liable to the Corporation after
any such notice is given by the Agent shall be held by the Corporation in trust
for the Agent and paid over to the Agent on request.
SECTION 1.13 NO RELEASE
The loss, injury or destruction of the Collateral shall not operate in
any manner to release or discharge the Corporation from any of its liabilities
to the Agent.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.1 REPRESENTATIONS AND WARRANTIES
The Corporation hereby represents and warrants to the Agent and the
Canadian Lenders that:
(1) the Corporation has good title to, or a valid leasehold interest in, or
a valid contractual agreement to use, all of the Collateral owned by
the Corporation free and clear of any Lien, except for a Permitted
Lien. Except as expressly permitted by the Loan Agreement and such as
may have been filed in favor of Agent or the Canadian Lenders relating
to this Amended and Restated Security Agreement, no effective financing
statement or other instrument similar in effect under the law of any
jurisdiction covering all or any part of the Collateral is on file in
any filing, registry or recording office;
(2) all certificates or instruments (excluding cheques and drafts)
evidencing, comprising or representing the Collateral have been
delivered to the Agent duly endorsed or accompanied by duly executed
instruments of transfer or assignment in blank. Notwithstanding,
anything to the contrary in the preceding sentence, (i) the Corporation
is not obligated to deliver to the Agent negotiable instruments of
title unless an Event of Default has occurred and is continuing and the
Agent requests delivery of such items and (ii) the Corporation is not
obligated to deliver to the Agent Letters of Credit unless requested by
the Agent.
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If requested by the Agent, the Corporation will cause all Letters of
Credit to be delivered to the Agent. If the Corporation is required to
deliver Letters of Credit to the Agent, then the Corporation will
notify the Agent from time to time of its desire to make a draw on a
Letter of Credit and its request for return of the Letter of Credit for
such purposes. The Agent shall, promptly after receipt of any such
request, return the requested Letter of Credit to the Corporation. The
Corporation shall within five (5) business days after receipt of such
Letter of Credit either, present such Letter of Credit to the issuing
bank for draw thereon or return the Letter of Credit to the Agent. If
the Letter of Credit is partially (rather than fully) drawn, the
Corporation shall return the Letter of Credit to the Agent within three
(3) business days after submitting the Letter of Credit for such
partial draw (or if the Letter of Credit is retained by the issuing
bank, then within three (3) business days after the Letter of Credit is
returned to the Corporation by the issuing bank);
(3) the Security Interest in the Collateral granted to the Agent for its
own benefit and as agent and for the rateable benefit of the Canadian
Lenders hereunder creates a valid security interest in the Collateral,
securing the payment of Obligations as provided in Section 1.3 hereof.
Upon the filing of financing change statements naming the Corporation
as "debtor", naming the Agent as "secured party" and describing the
Collateral pursuant to the PPSA and the Personal Property Security Act
(Newfoundland) and the filing of a financing statement naming the
Corporation as "debtor" and the Agent as "secured party" pursuant to
the Personal Property Security Act (Nova Scotia), the Security Interest
in the Collateral granted hereunder will constitute a perfected
security interest in all Collateral now owned and hereafter acquired by
the Corporation enforceable against the Corporation prior to all other
Liens (except for Permitted Liens), and all other documents and
instruments for all filings, registrations and recordings and other
actions necessary or desirable to perfect and protect such Security
Interest will have been duly made or taken.
SECTION 2.2 ADDITIONAL COVENANTS
The Corporation covenants with the Agent that the Corporation shall:
(1) ensure that the representations and warranties set forth in Section 2.1
shall be true and correct at all times;
(2) not permit the Collateral to be affixed to real or personal property so
as to become a fixture or accession without the prior written consent
of the Agent, except where the Collateral is affixed to real or
personal property which is a Permitted Lien or which is also subject to
a security interest in favour of the Agent and which is not subject to
a security interest in favour of any other person, except for a
Permitted Lien;
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(3) not change its name or, in addition to and without limiting the
provisions of the Loan Agreement, shall not amalgamate with any other
corporation, continue to, reorganize or reincorporate itself under any
other jurisdiction other than the Province of
Alberta without (i) first
giving fifteen (15) days notice to the Agent of its intention to do so
and providing such other information in connection therewith as the
Agent may request including, without limitation, the new name and the
names of all amalgamating corporations and the date when such new name
or amalgamation is to become effective; and (ii) taking all action
satisfactory to the Agent with respect to the new name or jurisdiction
to maintain the Security Interest of the Agent in the Collateral
intended to be granted and perfected hereby at all times fully
perfected and in full force and effect;
(4) pay to the Agent forthwith upon demand all reasonable costs, charges
and expenses (including, without limiting the generality of the
foregoing, all legal, receiver's and accounting fees and expenses)
incurred by or on behalf of the Agent or the Canadian Lenders in
connection with the preparation, execution and perfection of this
Amended and Restated Security Agreement and the carrying out of any of
the provisions of this Amended and Restated Security Agreement
including, without limiting the generality of the foregoing, protecting
and preserving the Security Interest and enforcing by legal process or
otherwise the remedies provided herein; and all such costs and expenses
shall be added to and form part of the Obligations secured hereunder;
(5) if the Agent gives value to enable the Corporation to acquire rights in
or for the use of any Collateral, use such value for such purposes; and
(6) except as expressly permitted by the Loan Agreement, pay promptly when
due all property and other taxes, assessments and governmental charges
or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral, except to
the extent the validity thereof is being contested in good faith;
provided that the Corporation shall in any event pay such taxes,
assessments, charges, levies or claims not later than five (5) days
prior to the date of any proposed sale under any judgment, writ or
warrant of attachment entered or filed against the Corporation or any
of the Collateral as a result of the failure to make such payment.
SECTION 2.3 SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
The Corporation shall:
(a) keep correct and accurate records of Inventory owned by the
Corporation itemizing and describing the kind, type and
quality of such Inventory, such Corporation's cost therefor
and (where applicable) the current list prices for such
Inventory;
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(b) if any Inventory is in possession or control of any of the
Corporation's agents or processors, upon the occurrence and
continuation of an Event of Default, instruct such agent or
processor to hold all such Inventory for the account of the
Agent and subject to the instructions of the Agent;
(c) the Corporation shall, at its own expense, maintain insurance
with respect to the Equipment and INVENTORY in accordance with
the terms of the Loan Agreement;
(d) upon (i) the occurrence and during the continuation of any
Event of Default or (ii) the actual or constructive loss of
any Equipment or Inventory, all insurance payments in respect
of such Equipment or Inventory shall be paid to and applied by
the Agent against the Obligations as specified in the Loan
Agreement.
SECTION 2.4 SPECIAL COVENANTS WITH RESPECT TO RECEIVABLES
(a) The Corporation shall, for not less than three (3) years from
the date on which each Receivable of the Corporation arose,
maintain (i) records of such Receivable in such detail, form
and scope as is consistent with good business practice, and
(ii) all documentation relating thereto as is consistent with
good business practice.
(b) Except as otherwise provided in this Section 2.1(b), the
Corporation shall continue to collect, at its own expense, all
amounts due or to become due to the Corporation or in any way
relate to the Receivables. In connection with such
collections, the Corporation may take (and, upon the
occurrence and during the continuance of an Event of Default
at the Agent's direction, shall take) such action as the
Corporation or the Agent may deem necessary or advisable to
enforce collection of amounts due or to become due under the
Receivables; provided, however, that the Agent shall have the
right at any time, upon the occurrence and during the
continuance of an Event of Default and upon written notice to
the Corporation of its intention to do so, to notify the
account debtors or obligors under any Receivables of the
assignment of such Receivables to the Agent and to direct such
account debtors or obligors to make payment of all amounts due
or to become due to the Corporation thereunder directly to the
Agent, to notify each Person maintaining a lockbox, blocked
account or similar arrangement to which account debtors or
obligors under any Receivables have been directed to make
payment to remit all amounts representing collections on
cheques and other payment items from time to time sent to or
deposited in such lockbox, blocked account or other
arrangement directly to the Agent and, upon such notification
and at the expense of the Corporation, to enforce collection
of
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any such Receivables and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same
extent as the Corporation might have done. After receipt by
the Corporation of the notice from the Agent referred to in
the proviso to the preceding sentence and during the
continuation of an Event of Default, (i) all amounts and
proceeds (including cheques and other instruments) received by
the Corporation in respect of the Receivables shall be
received in trust for the benefit of the Agent hereunder,
shall be segregated from other funds of the Corporation and
shall be forthwith paid over or delivered to the Agent in the
same form as so received (with any necessary endorsement) to
be held as cash Collateral and applied against the Obligations
as provided by the Loan Agreement, and (ii) the Corporation
shall not adjust, settle or compromise the amount or payment
of any Receivable, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount
thereon.
ARTICLE 3
ENFORCEMENT
SECTION 3.1 ENFORCEMENT
The Security Interest shall be and become enforceable against the
Corporation upon the occurrence and during the continuance of an Event of
Default.
SECTION 3.2 REMEDIES
(a) Whenever the Security Interest has become enforceable, the
Agent may realize upon the Collateral and enforce its rights
by:
(i) entry onto any premises where Collateral consisting
of tangible personal property may be located;
(ii) entry into possession of the Collateral by any method
permitted by law;
(iii) sale or lease of all or any part of the Collateral;
(iv) collection of any proceeds arising in respect of the
Collateral;
(v) collection, realization or sale of, or other dealing
with, the Receivables;
(vi) appointment by instrument in writing of a receiver or
agent of all or any part of the Collateral and
removal or replacement from time to time of any
receiver or agent;
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(vii) institution of proceedings in any court of competent
jurisdiction for the appointment of a receiver of all
or any part of the Collateral;
(viii) institution of proceedings in any court of competent
jurisdiction for sale or foreclosure of all or any
part of the Collateral;
(ix) filing of proofs of claim and other documents to
establish claims to the Collateral in any proceeding
relating to the Corporation; and
(x) any other remedy or proceeding authorized or
permitted under the PPSA or otherwise by law or
equity.
(b) Such remedies may be exercised from time to time separately or
in combination and are in addition to, and not in substitution
for, any other rights of the Agent and the Canadian Lenders
however created. The Agent or the Canadian Lenders shall not
be bound to exercise any right or remedy, and the exercise of
any rights and remedies shall be without prejudice to the
rights of the Agent and the Canadian Lenders in respect of the
Obligations including the right to claim for any deficiency.
SECTION 3.3 ADDITIONAL RIGHTS
In addition to the remedies set forth in Section 3.2, the Agent may,
whenever the Security Interest has become enforceable:
(a) require the Corporation, by notice in writing, at the
Corporation's expense, to assemble the Collateral at a place
or places designated by notice in writing and the Corporation
agrees to so assemble the Collateral;
(b) require the Corporation, by notice in writing, to disclose to
the Agent the location or locations of the Collateral and the
Corporation agrees to make such disclosure when so required;
(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral,
whether on the premises of the Corporation or otherwise;
(d) enter upon, occupy and use all or any of the premises,
buildings, and other property of or used by the Corporation
for such time as the Agent sees fit, free of charge, to
exercise any of the Agent's rights or remedies under or in
relation to this Amended and Restated Security Agreement, and
the Agent and the Canadian Lenders shall not be liable to the
Corporation for any act, omission or negligence in so doing or
for any rent, charges, depreciation or damages incurred in
connection with or resulting from such action;
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(e) borrow for the purpose of the maintenance, preservation or
protection of the Collateral and grant a security interest in
the Collateral, whether or not in priority to the Security
Interest, to secure repayment; and
(f) commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing,
collecting, realizing or obtaining possession or payment of
the Collateral, and give good and valid receipts and
discharges in respect of the Collateral and compromise or give
time for the payment or performance of all or any part of the
accounts or any other obligation of any third party to the
Corporation.
SECTION 3.4 RECEIVER'S POWERS.
(a) Any receiver appointed by the Agent shall be vested with the
rights and remedies which could have been exercised by the
Agent in respect of the Corporation or the Collateral. The
identity of the receiver, its replacement and its remuneration
shall be within the sole and unfettered discretion of the
Agent. Any receiver appointed by a court shall have all powers
and discretions as are granted in the instrument of
appointment and any supplemental instruments.
(b) Any receiver appointed by the Agent shall act as agent for the
Agent for the purposes of taking possession of the Collateral,
but otherwise and for all other purposes (except as provided
below), as agent for the Corporation. The receiver may sell,
lease, or otherwise dispose of Collateral as agent for the
Corporation or as agent for the Agent as the Agent may
determine in its discretion. The Corporation agrees to ratify
and confirm all actions of the receiver acting as agent for
the Corporation, and to release and indemnify the receiver in
respect of all such actions.
(c) The Agent, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the
Corporation or otherwise and shall not be responsible for any
misconduct or negligence of the receiver.
SECTION 3.5 APPOINTMENT OF ATTORNEY
The Corporation irrevocably appoints the Agent (and any of its
officers) as attorney of the Corporation (with full power of substitution) to
(a) sign the Corporation's name on any documents, instruments and other items
described in the Loan Agreement; (b) request at any time from parties indebted
to the Corporation verification of information concerning such indebtedness
including the amount owing thereon (provided that any verification prior to an
the occurrence of an Event of Default shall not contain the Agent's name); and
(c) upon the occurrence and during the continuance of an Event of Default: (i)
convey any item of the Collateral to any purchaser thereof; and (ii) make any
payment or take any act necessary or desirable to
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protect or preserve any Collateral. The Agent's authority hereunder shall
include, without limitation, the authority to execute and give receipt for any
certificate of ownership or any document, to transfer title to any item of the
Collateral and to take any other actions arising from or incident to the powers
granted to the Agent under this Amended and Restated Security Agreement. This
power of attorney is coupled with an interest and is irrevocable.
SECTION 3.6 DEALING WITH THE COLLATERAL
(a) The Agent and the Canadian Lenders shall not be obliged to
exhaust their recourse against the Corporation or any other
person or against any other security it may hold in respect of
the Obligations before realizing upon or otherwise dealing
with the Collateral in such manner as the Agent may consider
desirable.
(b) The Agent and the Canadian Lenders may grant extensions or
other indulgences, take and give up securities, accept
compositions, grant releases and discharges and otherwise deal
with the Corporation, the Collateral and with other persons,
sureties or securities as it may see fit without prejudice to
the Obligations, the liability of the Corporation or the
rights of the Agent in respect of the Collateral.
(c) Except as otherwise provided by law or this Amended and
Restated Security Agreement, the Agent and the Canadian
Lenders shall not be: (i) liable or accountable for any
failure to collect, realize or obtain payment in respect of
the Collateral; (ii) bound to institute proceedings for the
purpose of collecting, enforcing, realizing or obtaining
payment of the Collateral or for the purpose of preserving any
rights of any persons in respect of the Collateral; (iii)
responsible for any loss occasioned by any sale or other
dealing with the Collateral or by the retention of or failure
to sell or otherwise deal with the Collateral; or (iv) bound
to protect the Collateral from depreciating in value or
becoming worthless.
SECTION 3.7 STANDARDS OF SALE
The Corporation acknowledges that, upon the Security Interest becoming
enforceable and without prejudice to the ability of the Agent to dispose of the
Collateral in any manner which is commercially reasonable:
(a) the Collateral may be disposed of in whole or in part;
(b) the Collateral may be disposed of by public auction, public
tender and/or private contract, with or without advertising
and without any other formality;
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(c) any assignee of the Collateral or any part thereof may be a
customer of the Agent or a Canadian Lender;
(d) a disposition of the Collateral or any part thereof may be on
such terms and conditions as to credit or otherwise as the
Agent, in its sole discretion, may deem advantageous; and
(e) the Agent may establish an upset or reserve bid or price in
respect of the Collateral or any part thereof.
SECTION 3.8 DEALINGS BY THIRD PARTIES
(a) No person dealing with the Agent, any of the Canadian Lenders
or an agent or receiver shall be required to determine (i)
whether the Security Interest has become enforceable, (ii)
whether the powers which such person is purporting to exercise
have become exercisable, (iii) whether any money remains due
to the Agent or the Canadian Lenders by the Corporation, (iv)
the necessity or expediency of the stipulations and conditions
subject to which any sale or lease is made, (v) the propriety
or regularity of any sale or other dealing by the Agent or any
Canadian Lender with the Collateral, or (vi) how any money
paid to the Agent or the Canadian Lenders has been applied.
(b) At any time on or after such time as the Security Interest
becomes enforceable, any purchaser of all or any part of the
Collateral from the Agent or a receiver or agent shall hold
the Collateral absolutely, free from any claim or right of
whatever kind, including any equity of redemption, of the
Corporation, which it specifically waives (to the fullest
extent permitted by law) as against any such purchaser
together with all rights of redemption, stay or appraisal
which the Corporation has or may have under any rule of law or
statute now existing or hereafter adopted.
ARTICLE 4
GENERAL
SECTION 4.1 DISCHARGE
The Security Interest shall be discharged upon, but only upon, (i) full
payment and performance of the Obligations, and (ii) the Agent and the Canadian
Lenders having no obligations under the Loan Documents or otherwise. Upon
discharge of the Security Interest and at the request and expense of the
Corporation, the Agent shall execute and deliver to the Corporation such
releases and discharges as the Corporation may reasonably require.
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SECTION 4.2 LOAN AGREEMENT GOVERNS
Notwithstanding anything to the contrary contained herein, this Amended
and Restated Security Agreement is issued subject always to the covenants,
conditions, limitations and other provisions contained in the Loan Agreement. In
the event of any conflict, discrepancy or ambiguity in or between any of the
provisions of this Amended and Restated Security Agreement and any of the
provisions of the Loan Agreement, including, without limitation, in the amount
payable thereunder, the principal amount for which this Amended and Restated
Security Agreement is expressed to be security, the interest payable on such
principal amount, the time at which demand may be made, the covenants therein
and the remedies available to the Agent or the Canadian Lenders, the provisions
of the Loan Agreement shall prevail and the provisions of this Amended and
Restated Security Agreement shall be deemed to be rendered inoperative by the
Loan Agreement, to the extent necessary to eliminate such conflict, discrepancy,
difference or ambiguity.
SECTION 4.3 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Amended and Restated
Security Agreement, nor consent to any departure by the Corporation from such
provisions, is effective unless in writing and, in the case of an amendment,
signed by the Corporation and the Agent or, in the case of a waiver or consent,
approved by the Agent. Any amendment, waiver or consent is effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 4.4 WAIVERS
No failure on the part of the Agent or any of the Canadian Lenders to
exercise, and no delay in exercising, any right under this Amended and Restated
Security Agreement shall operate as a waiver of such right; nor shall any single
or partial exercise of any right under this Amended and Restated Security
Agreement preclude any other or further exercise of such right or the exercise
of any other right.
SECTION 4.5 NO MERGER
This Amended and Restated Security Agreement shall not operate by way
of merger of any of the Obligations and no judgment recovered by the Agent or
any of the Canadian Lenders shall operate by way of merger of, or in any way
affect, the Security Interest, which is in addition to, and not in substitution
for, any other security now or hereafter held by the Agent for itself and the
rateable benefit of the Canadian Lenders in respect of the Obligations.
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SECTION 4.6 FURTHER ASSURANCES
The Corporation shall from time to time, whether before or after the
Security Interest shall have become enforceable, do all acts and things and
execute and deliver all transfers, assignments and instruments as the Agent may
reasonably require for (i) protecting the Collateral, (ii) perfecting the
Security Interest, and (iii) exercising all powers, authorities and discretions
conferred upon the Agent, provided that notwithstanding the foregoing, the
Corporation is not required to assist the Agent in exercising any rights
available to the Agent which are dependent upon the occurrence of an Event of
Default until the Security Interest has become enforceable. The Corporation
shall, from time to time after the Security Interest has become enforceable, do
all acts and things and execute and deliver all transfers, assignments and
instruments as the Agent may require for facilitating the sale or other
disposition of the Collateral in connection with its realization.
SECTION 4.7 SUPPLEMENTAL SECURITY
This Amended and Restated Security Agreement is in addition and without
prejudice to and supplemental all other security now held or which may hereafter
be held by the Agent or the Canadian Lenders as security for the Obligations.
SECTION 4.8 NOTICES
Any notices, directions or other communications provided for in this
Amended and Restated Security Agreement shall be in writing and given in
accordance with the provisions of the Loan Agreement.
SECTION 4.9 SUCCESSORS AND ASSIGNS
This Amended and Restated Security Agreement shall be binding upon the
Corporation, its successors and assigns, and shall enure to the benefit of the
Agent and its successors and permitted assigns. The rights of the Agent
hereunder shall be assignable in accordance with the provisions of the Loan
Agreement.
SECTION 4.10 GENDER AND NUMBER
Any reference in this Amended and Restated Security Agreement to gender
shall include all genders and words importing the singular number only shall
include the plural and vice versa.
SECTION 4.11 HEADINGS, ETC.
The division of this Amended and Restated Security Agreement into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect its interpretation.
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SECTION 4.12 SEVERABILITY
If any provision of this Amended and Restated Security Agreement shall
be deemed by any court of competent jurisdiction to be invalid or void, the
remaining provisions shall remain in full force and effect.
SECTION 4.13 GOVERNING LAW
This Amended and Restated Security Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the Province of
Alberta
and the laws of Canada applicable therein.
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IN WITNESS WHEREOF the Corporation has executed this Amended and
Restated Security Agreement.
GRANT PRIDECO CANADA LTD.
By:
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Authorized Signing Officer
By:
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Authorized Signing Officer
