COMMERCIAL SECURITY
AGREEMENT
Borrower:
Chemical and Equipment Specialties, Inc. (TIN: 00-0000000);
Xxxx'x Technology, Inc. (TIN: 00-0000000);
Plainsman Technology, Inc. (TIN: 00-0000000);
Padko International, Inc. (TIN: 00-0000000); and
Esses, Inc. (TIN: 00-0000000)
XX Xxx 0000 Xxxxxx, XX 00000.
Grantor:
Chemical and Equipment Specialties, Inc. (TIN: 00-0000000);
Xxxx'x Technology, Inc. (TIN: 00-0000000);
Esses, Inc.; (TIN: 00-0000000);
Plainsman Technology, Inc. (TIN: 00-0000000); and
Padko, International, Incorporated (TIN: 00-0000000)
XX Xxx 0000 Xxxxxx, XX 00000.
Lender:
Legacy Bank,
Legacy Bank Duncan North Branch,
PO Box 1109, 0000 X. Xxx 00,
Xxxxxx, XX 00000-0000.
THIS COMMERCIAL SECURITY AGREEMENT dated January 23, 2001, is made and executed
among Chemical and Equipment Specialties, Inc.; Xxxx'x Technology, Inc.; Esses,
Inc.; Plainsman Technology, Inc.; and Padko International, Incorporated
("Grantor"); Chemical and Equipment Specialties, Inc.; Xxxx'x Technology, Inc.;
Plainsman Technology, Inc.; Padko International, Inc.; and Esses, Inc.
("Borrower"); and Legacy Bank ("Lender").
Borrower, Lender and XXXXX X. XXXXX, 3109 Stagestand, Xxxxxx, Xxxxxxxx 00000,
hereinafter referred to as "Guarantor" have entered into a Business Loan
Agreement ("Business Loan Agreement") of even date herewith whereby Lender
agreed to make a loan to Borrower evidenced by the Note according to the terms
and conditions of the Business Loan Agreement, Lender has required as a
condition to making the loan to Borrower as provided in the Business Loan
Agreement that Borrower execute and deliver to Lender this Agreement, granting
to Lender a Security Interest in the Collateral for the repayment of the
indebtedness pursuant to the Business Loan Agreement. Reference to the Business
Loan Agreement is hereby made for all purposes.
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest in the Collateral to secure the indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
indebtedness and performance of all other obligations under the Note and this
Agreement:
All Inventory, Chattel Paper, Electronic Chattel Paper, Commercial Tort Claims,
Commingled Goods, Deposit Accounts, Documents of Title, Fixtures, Accounts,
Equipment, General Intangibles (including without limitation, the property set
out in Schedule 1 attached hereto and incorporated herein by reference),
Instruments, Goods, Investment Property, Letter of Credit Rights, Money, Payment
Intangibles, Software and Equipment (including, without limitation, the property
set out in Schedule 2 attached hereto and incorporated herein by reference).
In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements and additions to any of the collateral described herein, whether
added now or later.
(B) All products and produce of any of the property described in this Collateral
section.
(C) All accounts, general intangibles, instruments, rents, monies, payments, and
all other rights, arising out of a sale, lease, or other disposition of any of
the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction,
loss, or other disposition of any of the property described in this Collateral
section, and sums due from a third party who has damaged or destroyed the
Collateral or from that party's insurer, whether due to judgment, settlement or
other process.
(E) All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media, together with all of Grantor's right, title,
and interest in and to all computer software required to utilize, create,
maintain, and process any such records or data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the indebtedness, then
Lender will not have a security interest in such Collateral unless and until
such a notice is given.
Some or all of the Collateral may be located on the following described real
estate:
See Schedule 3 and 4 attached hereto and incorporated herein by reference.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Borrower to
Lender, or anyone or more of them, as well as all claims by Lender against
Borrower or anyone or more of them, owed to Lender, whether of a like nature to
the Note Indebtedness or not, whether arising from a loan or a purchased
obligation, whether incurred for a consumer or a business purpose, whether now
existing or hereafter arising, whether related or unrelated to the purpose of
the Note, whether voluntary or otherwise, whether due or not due, direct or
indirect, absolute or contingent, liquidated or unliquidated and whether
Borrower may be liable individually or jointly with others, whether obligated as
guarantor, surety, accommodation party or otherwise, and whether recovery upon
such amounts may be or hereafter may become barred by any statute of
limitations, and whether the obligation to repay such amounts may be or
hereafter may become otherwise unenforceable.
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender in
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower's request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Borrower or Grantor, or any
other party to the indebtedness or the Collateral. Lender may do any of the
following with respect to any obligation of any Borrower, without first
obtaining the consent of Grantor: (A) grant any extension of time for any
payment, (B) grant any renewal, (C) permit any modification of payment terms or
other terms, or (D) exchange or release any Collateral or other security. No
such act or failure to act shall affect Lender's rights against Grantor or the
Collateral.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any XXX or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph,
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
With respect to the Collateral, Grantor represents and promises to Lender that:
Perfection of Security Interest. Grantor agrees to execute financing statements
and to take whatever other actions are requested by Lender to perfect and
continue Lender's security interest in the Collateral. Upon request of Lender,
Grantor will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender's interest upon any
and all chattel paper if not delivered to Lender for possession by Lender. This
is a continuing Security Agreement and will continue in effect even though all
or any part of the indebtedness is paid in full and even though for a period of
time Borrower may not be indebted to Lender.
Notices to Lender. Grantor will promptly notify Lender in writing at Lender's
address shown above (or such other addresses as Lender may designate from time
to time) prior to any (1) change in Grantor's name; (2) change in Grantor's
assumed business name(s); (3) change in the management of any corporation
Grantor; (4) change in the authorized signer(s); (5) change in Grantor's
principal office address; (6) conversion of Grantor to a new or different type
of business entity; or (7) change in any other aspect of Grantor that directly
or indirectly relates to any agreements between Grantor and Lender. No change in
Grantor's name will take effect until after Lender has been notified.
No Violation. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or
condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of accounts,
chattel paper, or general intangibles, as defined by the Uniform Commercial
Code, the Collateral is enforceable in accordance with its terms, is genuine,
and fully complies with all applicable laws and regulations concerning form,
content and manner of preparation and execution, and all persons appearing to be
obligated on the Collateral have authority and capacity to contract and are in
fact obligated as they appear to be on the Collateral. At the time any Account
becomes subject to a security interest in favor of Lender, the Account shall be
a good and valid account representing an undisputed, bona fide indebtedness
incurred by the account debtor, for merchandise held subject to delivery
instructions or previously shipped or delivered pursuant to a contract of sale,
or for services previously performed by Grantor with or for the account debtor.
So long as this Agreement remains in effect, Grantor shall not, without Lender's
prior written consent, compromise, settle, adjust, or extend payment under or
with regard to any such Accounts. There shall be no setoffs or counterclaims
against any of the Collateral, and no agreement shall have been made under which
any deductions or discounts may be claimed concerning the Collateral except
those disclosed to Lender in writing.
Location of the Collateral. Except in the ordinary course of Grantor's business,
Grantor agrees to keep the Collateral (or to the extent the Collateral consists
of intangible property such as accounts or general intangibles, the records
concerning the Collateral) at Grantor's address shown above or at such other
locations as are acceptable to Lender. Upon Lender's request, Grantor will
deliver to lender in form satisfactory to Lender a schedule of real properties
and Collateral locations relating to Grantor's operations, including without
limitation the following: (1) all real property Grantor owns or is purchasing;
(2) all real property Grantor is renting or leasing; (3) all storage facilities
Grantor owns, rents, leases, or uses; and (4) all other properties where
Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of Grantor's business,
including the sales of inventory, Grantor shall not remove the Collateral from
its existing location without Lender's prior written consent. To the extent that
the Collateral consists of vehicles, or other titled property, Grantor shall not
take or permit any action which would require application for certificates of
title for the vehicles outside the State of Oklahoma, without Lender's prior
written consent. Grantor shall, whenever requested, advise Lender of the exact
location of the Collateral.
Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, or as otherwise provided
for in this Agreement, Grantor shall not sell, offer to sell, or otherwise
transfer or dispose of the Collateral. While Grantor is not in default under
this Agreement, Grantor may sell inventory, but only in the ordinary course of
its business and only to buyers who qualify as a buyer in the ordinary course of
business. A sale in the ordinary course of Grantor's business does not include a
transfer in partial or total satisfaction of a debt or any bulk sale. Grantor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right to
the security interests granted under this Agreement. Unless waived by Lender,
all proceeds from any disposition of the Collateral (for whatever reason) shall
be held in trust for Lender and shall not be commingled with any other funds;
provided however. this requirement shall not constitute consent by Lender to any
sale or other disposition. Upon receipt, Grantor shall immediately deliver any
such proceeds to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
others to keep and maintain, the Collateral in good order, repair and condition
at all times while this Agreement remains in effect. Grantor further agrees to
pay when due all claims for work done on, or services rendered or material
furnished in connection with the Collateral so that no lien or encumbrance may
ever attach to or be filed against the Collateral. Inspection of Collateral.
Lender and Lender's designated representatives and agents shall have the right
at all reasonable times to examine and inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that such
taxes, assessments, and governmental and other charges have been paid in full
and in a timely manner. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used in violation of any Environmental Laws. Grantor and any tenant,
contractor, agent or other authorized user of any of the Collateral shall comply
with all federal, state and local laws, regulations and orders applicable to any
Collateral and relating to air, water (including surface and groundwater) and
land pollution, and the storage, disposal, use, generation, manufacture,
treatment, disposal, release or threatened release of any Hazardous Substance of
hazardous or toxic materials. Grantor hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any Environmental Laws, and (2) agrees
to indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This obligation to
indemnify shall survive the payment of the indebtedness and the satisfaction of
this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days' prior written notice to Lender and not including any disclaimer
of the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Grantor or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as required under
this Agreement, Lender may (but shall not be obligated to) obtain such insurance
as Lender deems appropriate, including if Lender so chooses "single interest
insurance," which will cover only Lender's interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any
loss or damage to the Collateral. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Lender
as part of the Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or restoration. If Lender does not consent to repair or replacement of
the Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the indebtedness, and shall pay the balance to Grantor. Any proceeds
which have not been disbursed within six (6) months after their receipt and
which Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender reserves
for payment of insurance premiums, which reserves shall be created by monthly
payments from Grantor of a sum estimated by Lender to be sufficient to produce,
at least fifteen (15) days before the premium due date, amounts at least equal
to the insurance premiums to be paid. If fifteen (15) days before payment is
due, the reserve funds are insufficient, Grantor shall upon demand pay any
deficiency to Lender. The reserve funds shall be held by Lender as a general
deposit and shall constitute a non-interest-bearing account which Lender may
satisfy by payment of the insurance premiums required to be paid by Grantor as
they become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance premiums
required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as Lender
may reasonably request including the following: (1) the name of the insurer; (2)
the risks insured; (3) the amount of the policy; (4) the property insured; (5)
the then current value on the basis of which Insurance has been obtained and the
manner of determining that value; and (6) the expiration date of the policy. In
addition, Grantor shall upon request by Lender (however not more often than
annually) have an Independent appraiser satisfactory to Lender determine, as
applicable, the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it In any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time end even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note including any default interest rate,
from the date incurred or paid by Lender to the date of repayment by Grantor.
All such expenses will become a part of the indebtedness and, at Lender's
option, will (A) be payable on demand; (B) be added to the balance of the Note
and be apportioned among and be payable with any installment payments to become
due during either (1) the term of any applicable insurance policy; or (2) the
remaining term of the Note; or (C) be treated as a balloon payment which will be
due and payable at the Note's maturity. The Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon Default. If Lender is required by
law to give Grantor notice before or after Lender makes an expenditure, Grantor
agrees that notice sent by regular mail at least five (5) days before the
expenditure is made or notice delivered two (2) days before the expenditure is
made is sufficient, and that notice within sixty (60) days after the expenditure
is made is reasonable.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
Payment Default. Borrower fails to make any payment when due under the
indebtedness.
Other Defaults. Borrower or Grantor fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between lender and
Borrower or Grantor.
Default In Favor of Third Parties. Should Borrower or any Grantor default under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's or any Grantor's
ability to repay the indebtedness or perform their respective obligations under
this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or Grantor or on Borrower's or Grantor's behalf under this
Agreement, the Note, or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any time
and for any reason.
Insolvency. The dissolution or termination of Borrower's or Grantor's existence
as a going business except as may be specifically set out in Section 3.01 of the
Business Loan Agreement, the insolvency of Borrower or Grantor, the appointment
of a receiver for any part of Borrower's or Grantor's property, any assignment
for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against Borrower
or Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or Grantor or by any governmental
agency against any collateral securing the indebtedness. This includes a
garnishment of any of Borrower's or Grantor's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Borrower or Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower or Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
Guarantor of any of the indebtedness or Guarantor dies or becomes incompetent or
revokes or disputes the validity of, or liability under, any Guaranty of the
indebtedness.
Adverse Change. A material adverse change occurs in Borrower's or Grantor's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired.
Cure Provisions. If any default, other than a default in payment is curable and
if Grantor has not been given a notice of a breach of the same provision of this
Agreement within the preceding twelve (12) months, it may be cured (and no event
of default will have occurred) if Grantor, after receiving written notice from
Lender demanding cure of such default: (1) cures the default within thirty (30)
days; or (2) if the cure requires more than thirty (30) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Oklahoma Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
Accelerate Indebtedness. Lender may declare the entire indebtedness, including
any prepayment penalty which Borrower would be required to pay, immediately due
and payable, without notice of any kind to Borrower or Grantor.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any
portion of the Collateral and any and all certificates of title and other
documents relating to the Collateral. Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter upon the property of Grantor
to take possession of and remove the Collateral. If the Collateral contains
other goods not covered by this Agreement at the time of repossession, Grantor
agrees Lender may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or
otherwise dispose of the Collateral. Unless the Collateral in whole or in part
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender will give Grantor reasonable
notice of the time and place of any public sale, or of the time after which any
private sale or other disposition is to be made. Notwithstanding any other
provision of this Agreement, any requirement of notice for this purpose shall be
met if notice is mailed, postage prepaid, to the address of Grantor provided for
in this Agreement at least ten (10) days before sale or other disposition or
action. Lender shall be entitled to, and Grantor shall be liable for, all
reasonable costs and expenditures incurred in realizing on Lender's security
interest, including without limitation, all court costs, fees for sale, selling
costs and reasonable attorneys' fees as set forth in the Note or in this
Agreement. All such costs shall be secured by the security interest in the
Collateral covered by this Agreement.
In any action by Lender for the foreclosure of this Agreement, whether by
judicial foreclosure or power of sale, Lender shall be entitled to the
appointment of a receiver upon any failure of Grantor to comply with any term,
obligation, covenant, or condition contained in this Agreement, the Note, or any
Related Documents.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.
Lender may at any time in Lender's discretion transfer any Collateral into
Lender's own name or that of Lender's nominee and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the
indebtedness or apply it to payment of the indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust, xxx for, foreclose, or realize on the Collateral as
Lender may determine, whether or not indebtedness or Collateral is then due. For
these purposes, Lender may, on behalf of and in the name of Grantor, receive,
open and dispose of mail addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Borrower for any deficiency remaining on
the indebtedness due to Lender after application of all amounts received from
the exercise of the rights provided in this Agreement. Borrower shall be liable
for a deficiency even if the transaction described in this subsection is a sale
of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies it may have available at law, in equity, or
otherwise.
Election of Remedies. Except as may be prohibited by applicable law, all of
Lenders rights and remedies, whether evidenced by this Agreement, the Related
Documents, or by any other writing, shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Lender's right to declare a
default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. All prior and contemporaneous representations and discussions
concerning such matters either are included in this document or do not
constitute an aspect of the agreement of the parties. Except as may be
specifically set forth in this Agreement, no conditions precedent or subsequent,
of any kind whatsoever, exist with respect to Grantor's obligations under this
Agreement. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including Lender's reasonable attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this Agreement.
Lender may hire or pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Governing Law. This Agreement will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Oklahoma. This
Agreement has been accepted by Lender in the State of Oklahoma.
Joint and Several Liability. All obligations of Borrower and Grantor under this
Agreement shall be joint and several, and all references to Grantor shall mean
each and every Grantor, and all references to Borrower shall mean each and every
Borrower. This means that each Borrower and Grantor signing below is responsible
for all obligations in this Agreement. Where anyone or more of the parties is a
corporation, partnership, limited liability company or similar entity, it is not
necessary for Lender to inquire into the powers of any of the officers,
directors, partners, members, or other agents acting or purporting to act on the
entity's behalf, and any obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Grantor, shall constitute a waiver of any of Lender's rights or of
any of Grantor's obligations as to any future transactions. Whenever the consent
of Lender is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to be
given under this Agreement shall be given in writing, and shall be effective
when actually delivered, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally recognized
overnight courier, or, if mailed, when deposited in the United States mail, as
first class, certified or registered mail postage prepaid, directed to the
addresses shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice to the
other parties, specifying that the purpose of the notice is to change the
party's address. For notice purposes, Grantor agrees to keep Lender informed at
all times of Grantor's current address. To the extent permitted by applicable
law, if there is more than one Grantor, any notice given by Lender to any
Grantor is deemed to be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue the security interest granted in this Agreement. Lender may at
any time, and without further authorization from Grantor, file a carbon,
photographic or other reproduction of any financing statement or of this
Agreement for use as a financing statement. Grantor will reimburse Lender for
all expenses for the perfection and the continuation or the perfection of
Lender's security interest in the Collateral.
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be illegal, invalid, or unenforceable as to any person or
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other person or circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required by
law, the illegality, invalidity, or unenforceability of any provision of this
Agreement shall not affect the legality, validity or enforceability of any other
provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on
transfer of Grantor's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral becomes vested in a person other than Grantor, Lender, without notice
to Grantor, may deal with Grantor's successors with reference to this Agreement
and the indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Agreement or liability under the
indebtedness.
Survival of Representations and Warranties. All representations, warranties, and
agreements made by Grantor in this Agreement shall survive the execution and
delivery of this Agreement, shall be continuing in nature, and shall remain in
full force and effect until such time as Borrower's indebtedness shall be paid
in full.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Copies. A copy of this Commercial Security Agreement or of any financing
statement prepared or filed in connection with this transaction is sufficient as
a financing statement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code:
Account. The word "Account" means a trade account, account receivable, other
receivable, or other right to payment for goods sold or services rendered owing
to Grantor (or to a third party grantor acceptable to Lender).
Agreement. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.
Borrower. The word "Borrower" means Chemical and Equipment Specialties, Inc.;
Xxxx'x Technology, Inc.; Plainsman Technology, Inc.; Padko International,
Incorporated; and Esses, Inc., and all other persons and entities signing the
Note in whatever capacity.
Collateral. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral Description
section of this Agreement.
Default. The word "Default" means the Default set forth in this Agreement in the
section titled "Default".
Environmental Laws. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
Event of Default. The words "Event of Default" mean any of the events of default
set forth in this Agreement in the default section of this Agreement.
Grantor. The word "Grantor" means Chemical and Equipment Specialties, Inc.;
Xxxx'x Technology, Inc.; Esses, Inc.; Plainsman Technology, Inc.; and Padko
International, Incorporated.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation
party of any or all of the indebtedness.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances" also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.
Indebtedness. The word "indebtedness" means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with an
other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means Legacy Bank, its successors and assigns.
Note. The word "Note" means the Note executed by Borrower in the principal
amount of $2,709,980.00 dated January 23, 2001, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement.
Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS.
THIS AGREEMENT IS DATED January 23, 2001.
GRANTOR:
CHEMICAL AND EQUIPMENT SPECIALTIES, INC.
By: Xxxxx X. Xxxxx, President of Chemical and Equipment Specialties, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Chemical and Equipment
Specialties, Inc.
XXXX'X TECHNOLOGY, Inc.
By: Xxxxx X. Xxxxx, President of Xxxx'x Technology, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Xxxx'x Technology, Inc.
ESSES, INC.
By: Xxxxx X. Xxxxx, President of Esses, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Esses, Inc.
PLAINSMAN TECHNOLOGY, INC.
By: Xxxxx X. Xxxxx, President of Plainsman Technology, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Plainsman Technology, Inc.
PADKO INTERNATIONAL, INC.
By: Xxxxx X. Xxxxx, President of Padko International, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Padko International, Inc.
BORROWER:
CHEMICAL AND EQUIPMENT SPECIALTIES, INC.
By: Xxxxx X. Xxxxx, President of Chemical and Equipment Specialties, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Chemical and Equipment
Specialties, Inc.
XXXX'X TECHNOLOGY, Inc.
By: Xxxxx X. Xxxxx, President of Xxxx'x Technology, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Xxxx'x Technology, Inc.
PLAINSMAN TECHNOLOGY, INC.
By: Xxxxx X. Xxxxx, President of Plainsman Technology, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Plainsman Technology, Inc.
PADKO INTERNATIONAL, INC.
By: Xxxxx X. Xxxxx, President of Padko International, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Padko International, Inc.
ESSES, INC.
By: Xxxxx X. Xxxxx, President of Esses, Inc.
By: Xxx X. Xxxxxx, Chief Financial Officer of Esses, Inc.