EXHIBIT 10.10
SECURITY AGREEMENT
(COMPANY)
THIS SECURITY AGREEMENT (the "Agreement"), made as of August 11,
1998, by OMEGA PROTEIN CORPORATION, a Nevada corporation, and OMEGA PROTEIN,
INC., a Virginia corporation (individually and collectively, the "Company") in
favor of SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION, a national banking
association (the "Lender").
W I T N E S S E T H:
WHEREAS, the Company and Lender have entered into that certain
Revolving Credit Agreement, dated as of even date hereof (the "Credit
Agreement"), pursuant to which the Lender agreed to establish a $20,000,000
Commitment in favor of the Company; and
WHEREAS, it is a condition precedent to Lender's making the Commitment
available to the Company that the Company execute and deliver to the Lender a
security agreement substantially in the form hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Terms used but not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement. The following terms
shall have the following meanings (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
"Account Debtor" shall mean any "account debtor," as such term is
defined in Section 9-105(1)(a) of the UCC.
"Accounts" shall mean any "accounts," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by the Company or
in which the Company now has or hereafter acquires any rights, and, in any
event, shall include, without limitation, all accounts receivable, book
debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or
hereafter received or acquired by or belonging or owing to the Company
(including, without limitation, under any trade names, styles or divisions
thereof) whether arising out of goods sold or leased or services rendered
by the Company or from any other transaction, whether or not the same
involves the sale or lease of goods or services by the Company (including,
without limitation, any such obligation which might be characterized as an
account or contract right under the UCC) and all of the Company's rights
in, to and under all purchase orders or receipts now owned or hereafter
acquired by it for goods or services, and all of the Company's rights to
any goods represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed
goods), and all moneys due or to become due to the Company under all
contracts for the sale of goods or the performance of services or both by
the Company (whether or not yet earned by performance on the part of the
Company or in connection with any other transaction), now in existence or
hereafter occurring, including, without limitation, the right to receive
the proceeds of said purchase orders and contracts, and all collateral
security and guarantees of any kind given by any Person with respect to any
of the foregoing.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in Section 9-105(1)(b) of the UCC, that relates directly or
indirectly to Accounts, Inventory or the Proceeds of Accounts or Inventory
now owned or hereafter acquired by the Company or in which the Company now
has or hereafter acquires any rights and wherever located.
"Collateral" shall have the meaning assigned to such term in Section 2
of this Agreement.
"Computer Equipment" shall mean all computers, software, and
electronic data-processing and other office equipment now owned or
hereafter acquired by the Company or any Guarantor in which the Company or
any Guarantor now has or hereafter acquires any rights and wherever
located, and any and all additions, substitutions and replacements of any
of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto, provided however, that Computer Equipment shall not include any
computers, software, electronic data processing, telecommunications and
other office equipment relating solely to the processing of information for
the payroll, human resources, engineering and plant operations departments
of the Company.
"Contracts" shall mean all contracts, undertakings, or other
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) that relate directly or indirectly to Accounts, Inventory or
the Proceeds of Accounts or Inventory, in or under which the Company may
now or hereafter have any right, title or interest, including, without
limitation, with respect to an Account, any agreement relating to the terms
of payment or the terms of performance thereof.
"Documents" shall mean any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, that relate directly or indirectly to
Accounts, Inventory or the Proceeds of Accounts or Inventory now owned or
hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights and wherever located.
"Equipment" shall mean any "equipment," as such term is defined in
Section 9-109(2) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights and
wherever located, and, in any
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event, shall include, without limitation, all machinery, equipment, molds,
furnishings, fixtures, and computers and other electronic data-processing
and other office equipment now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights and
wherever located, and any and all additions, substitutions and replacements
of any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto, provided however, that Equipment shall not include Computer
Equipment.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in Section 9-106 of the UCC, now owned or hereafter
acquired by the Company or in which the Company now has or hereafter
acquires any rights, and, in any event, shall include, without limitation,
all right, title and interest which the Company may now or hereafter have
in, under or with respect to any Contract, causes of action, franchises,
tax refund claims, customer lists, Trademarks, Patents, rights in
intellectual property, Licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions and discoveries
(whether patented or patentable or not) and technical information,
procedures, designs, knowledge, know-how, software, data bases, business
records data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill, all claims under guaranties, security
interests or other security held by or granted to the Company to secure
payment of the Accounts by an Account Debtor obligated thereon, all rights
of indemnification and all other intangible property of any kind and
nature.
"Hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Agreement as a whole (including, without limitation, any
exhibits or schedules hereto) and not merely to the specific Section,
paragraph or clause in which the respective word appears.
"Instruments" shall mean any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, that relates directly or indirectly to
Accounts, Inventory or the Proceeds of Accounts or Inventory now owned or
hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights and wherever located, other than instruments
that constitute, or are a part of a group of writings that constitute,
Chattel Paper.
"Inventory" shall mean any "inventory," as such term is defined in
Section 9-109(4) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights and
wherever located, and, in any event, shall include, without limitation,
all inventory, merchandise, goods and other personal property, now owned or
hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights and wherever located, which are held for
sale or lease or are furnished or are to be furnished under a contract of
service or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in
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the Company's business, or the processing, packaging, delivery or shipping
of the same, and all finished goods.
"License" shall mean any Patent License, Trademark License or other
under which the Company is the licensor or licensee, and in the case of
Licenses under which the Company is the licensee, all rights to collect
royalties thereunder.
"Obligations" shall mean all amounts owing to the Lender pursuant to
the terms of this Agreement, the Credit Agreement, or any other Loan
Document, including without limitation, all Advances (including all
principal and interest payments due thereunder), Letter of Credit
Obligations, Fees, expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Company and its
Subsidiaries, covenants and duties of the Company and its Subsidiaries to
the Lender of every kind, nature and description, direct or indirect,
absolute or contingent, due or not due, in contract or tort, liquidated or
unliquidated, arising under this Agreement, the Credit Agreement or under
the other Loan Documents, by operation of law or otherwise, now existing or
hereafter arising or whether or not for the payment of money or the
performance or the nonperformance of any act, including, but not limited
to, all debts, liabilities and obligations owing by the Company and its
Subsidiaries to others which the Lender may have obtained by assignment or
otherwise, and all damages which the Company and its Subsidiaries may owe
to the Lender by reason of any breach by the Company or any of its
Subsidiaries of any representation, warranty, covenant, agreement or other
provision of this Agreement or of any other Loan Document.
"Patent License" shall mean all written agreements granting any right
to make, use, sell and/or practice any invention or discovery that is the
subject matter of a Patent now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights.
"Patent" or "Patents" shall mean one or all of the following now owned
or hereafter acquired or developed by the Company or in which the Company
now has or hereafter acquires any rights, including, without limitation,
pursuant to any Patent License, and wherever located: (i) all letters
patent of the United States or any other country and all applications for
letters patent of the United States or any other country, (ii) all
reissues, reexaminations, continuations, continuations-in-part, divisions,
and extensions of any of the foregoing, and (iii) all inventions disclosed
in and claimed in the Patents and any and all trade secrets and knowhow
related thereto.
"Proceeds" shall mean "proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation,
(i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Company from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to the Company from time to time in connection with any
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requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority), (iii)
any claim of the Company against third parties (A) for past, present or
future infringement of any Patent or Patent License or (B) for past,
present or future infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License,
(iv) any and all other amounts from time to time paid or payable under or
in connection with any of the Collateral, and (v) the following types of
property acquired with cash proceeds: Accounts, Chattel Paper, Contracts,
Documents, General Intangibles, Equipment and Inventory.
"Rolling Stock" shall mean engine operated equipment now owned or
hereafter acquired by the Company or any of its Subsidiaries, including,
aircraft, rough terrain cranes, manlifts, dump trailers, wheel loaders,
skid steer loaders, forklifts, skip loaders and utility wheel loaders.
"Security Agreement" shall mean this Agreement, dated as of the date
hereof, executed by the Company in favor of the Lender, as the same may be
amended, restated, supplemented or otherwise modified from time to time,
and any exhibits or schedules hereto.
"Supplemental Documentation" shall have the meaning assigned to it in
Section 5(a) of this Agreement.
"Trademark" or "Trademarks" shall mean one or all of the following now
owned or hereafter acquired by the Company or in which the Company now has
or hereafter acquires any rights (including, without limitation, pursuant
to any Trademark License): (i) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of any State
of the United States or any other country or any political subdivision
thereof, (ii) all extensions or renewals thereof and (iii) the goodwill of
the Company connected with the use of, and symbolized by, any of the
foregoing.
"Trademark License" shall mean all of the following now owned or
hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights: any written agreement granting any right to
use any Trademark or Trademark registration.
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"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Florida; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Lender's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Florida, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
"Vessel" shall mean all fishing vessels now owned or hereafter
acquired by the Company and any of its Subsidiaries, including, without
limitation, [purse boats].
2. Grant of Security Interest. (a) Collateral. As collateral
security for the prompt and complete payment and performance when due (whether
at stated maturity, by acceleration or otherwise) of all the Obligations and to
induce the Lender to enter into the Credit Agreement, make the Advances and
issue the Letters of Credit in accordance with the terms thereof, the Company
hereby grants to the Lender a security interest in all of the Company's right,
title and interest in, to and under the following property whether now owned by
or owing to or hereafter acquired by or arising in favor of the Company
(including under any trade names, styles, or derivations thereof), and whether
owned or consigned by or to or leased from or to, the Company regardless of
where located, but expressly excluding (i) any real estate currently owned by or
hereafter acquired by the Company, (ii) Vessels, (iii) Rolling Stock, (iv)
Equipment, and (v) any Proceeds of such real estate, Vessels, Rolling Stock and
Equipment (all of which being hereinafter collectively referred to as the
"Collateral"):
(i) all Accounts of the Company;
(ii) all Chattel Paper of the Company;
(iii) all Contracts of the Company;
(iv) all Documents of the Company;
(v) all Computer Equipment of the Company;
(vi) all General Intangibles of the Company;
(vii) all Instruments of the Company;
(viii) all Inventory of the Company;
(ix) all accounts maintained by the Company with any financial
institution which relate directly or indirectly to Accounts, Inventory or
Proceeds of Accounts or
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Inventory, including without limitation, all of the accounts described in
Schedule 5 attached hereto, and all funds on deposit therein, all
investments arising out of such funds, all claims thereunder or in
connection therewith, all cash, securities, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of such accounts, such funds or such investments;
(x) all books, records, printouts, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software, including source and object codes (owned by the Company or in
which it has an interest) which at any time evidence or contain information
relating to any of the Collateral (including, without limitation, customer
lists and supplier lists) or are otherwise necessary or helpful in the
collection thereof or realization thereupon;
(xi) guaranties, warranties, liens on real or personal property,
leases, and other agreements and property which in any way secure or relate
to any Accounts, Inventory, General Intangibles, Contracts, Documents,
Instruments or Chattel Paper, or are acquired for the purpose of securing
and enforcing any item thereof; and
(xii) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of each of the foregoing;
provided, however, that the foregoing grant of a security interest shall be
subordinated with respect to any assets in which a security interest currently
is or hereinafter will be granted by the Company pursuant to transactions or
agreements in form and substance satisfactory to the Lender.
(b) Property in Possession. In addition, as collateral security for
the prompt and complete payment and performance when due of the Obligations and
in order to induce the Lender as aforesaid, the Lender is hereby granted a lien
and security interest in all property of the Company held by the Lender,
including, without limitation, all property of every description, now or
hereafter in the possession or custody of or in transit to the Lender for any
purpose, including safekeeping, collection or pledge, for the account of the
Company, or as to which the Company may have any right or power.
(c) The Company intends and hereby acknowledges that the grant of a
security interest in the Collateral to the Lender conveys a security interest in
all right, title and interest of the Company to the Collateral, whether such
Collateral is owned individually, jointly or severally by the Company.
3. Right of Lender; Limitations on the Lender's Obligations;
License.
(a) The Company Remains Liable. It is expressly agreed by the Company
that,
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anything herein to the contrary notwithstanding, the Company shall remain liable
under each of its Contracts and each of its Licenses to observe and perform all
the conditions and obligations to be observed and performed by it thereunder and
the Company shall perform all of its duties and obligations thereunder, all in
accordance with and pursuant to the terms and provisions of each such Contract
or License. The Lender shall not have any obligation or liability under any
Contract or License by reason of or arising out of this Agreement or the
granting to the Lender of a security interest therein or the receipt by the
Lender of any payment relating to any Contract or License pursuant hereto, nor
shall the Lender be required or obligated in any manner to perform or fulfill
any of the obligations of the Company under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or License, or to present or file any claim, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
(b) Direct Collection. The Lender may at any time, on or after the
Acceleration Date, open the Company's mail and collect any and all amounts due
from Account Debtors, and notify Account Debtors of the Company, parties to the
Contracts of the Company, obligors of Instruments of the Company and obligors in
respect of Chattel Paper of the Company that the Accounts and the right, title
and interest of the Company in and under such Contracts, such Instruments and
such Chattel Paper have been assigned to the Lender and that payments shall be
made directly to the Lender or to a lockbox designated by the Lender. Upon the
request of the Lender made at any time on or after the Acceleration Date, the
Company will so notify such Account Debtors, parties to such Contracts, obligors
of such Instruments and obligors in respect of such Chattel Paper. The Lender
also may at any time on or after the Acceleration Date, in its own name or in
the name of the Company, communicate with such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of such Chattel
Paper to verify with such Persons to the Lender's sole satisfaction the
existence, amount and terms of any such Accounts, Contracts, Instruments or
Chattel Paper.
(c) Test Verifications. Upon reasonable prior notice to the Company
(unless an Event of Default has occurred, in which case no notice is necessary),
the Lender shall have the right to make test verifications of the Accounts and
physical verifications of the Inventory in any reasonable manner and through any
reasonable medium that it considers advisable, provided however, that (i) the
Lender must choose a manner and medium which will not be conspicuous to the
clients and customers of the Company, (ii) the Company agrees to furnish all
such assistance and information as the Lender may require in connection
therewith, and (iii) in the event the Lender exercises its right to make test
verifications at a time when no Event of Default has occurred or is continuing,
the Lender shall pay all expenses associated with such test verification.
4. Representations, Warranties and Covenants. The Company hereby
represents, warrants and covenants that:
(a) Locations, Name of Debtor, Etc. All of the Inventory is located
at the
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places specified in Schedule 1 attached hereto and such location is an owned,
leased or bailment location as specified in Schedule 1 attached hereto. The
correct corporate name, the principal place of business and the chief executive
office of the Company and the places where the Company's books and records
concerning the Collateral are currently kept are set forth in Schedule 2
attached hereto and made a part hereof. All records concerning Accounts and
General Intangibles and all originals of any Documents, Instruments or Chattel
Paper are located at the addresses set forth on Schedule 2 and none of the
Accounts or General Intangibles is evidenced by a promissory note or other
Instrument except for notes or other Instruments which have been delivered to
the Lender.
(b) Accounts Accurate. The amount represented by the Company to the
Lender in the most recent financial statements delivered to the Lender and from
time to time in the future as the amount owing by each Account Debtor is within
five percent (5%) of the true and correct amount actually owing by such Account
Debtor thereunder, and the aggregate amount owing by all Account Debtors in
respect of all Accounts is within five percent (5%) of the true and correct
amount actually owing by such Account Debtors thereunder.
(c) Exclusive Possession and Control. The Company has exclusive
possession and control of the Inventory, except for (i) Inventory temporarily in
transit with common or other carriers, (ii) Inventory located at (A) a location
listed on Schedule 1 specifying that the Company does not have exclusive
possession and control or (B) such other locations as are permitted by the
Lender pursuant to Section 5(b) of this Agreement, and (iii) Inventory located
at the places of business of the Company's customers.
(d) Legal Owner. The Company is the legal and beneficial owner of, or
has rights to use, the Collateral free and clear of all Liens other than
Permitted Liens and, in the case of Patents or Trademarks, free and clear of all
licenses, registered-user agreements and covenants not to xxx third persons.
The Company has not, during the five (5) years preceding the date hereof, been
known as or used any other corporate, trade or fictitious name, except as
disclosed on Schedule 3 hereto, nor acquired all or substantially all the
assets, capital stock or operating unit of any Person, except as disclosed on
Schedule 3 hereto, and each predecessor in interest of the Company during the
five (5) years preceding the Closing Date is disclosed on Schedule 3 hereto.
(e) No Security Agreement. No effective security agreement, financing
statement, equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in any public
office, except (i) such as may have been filed by the Company in favor of the
Lender pursuant to this Agreement, and (ii) those filed by the United States to
secure the Title XI Financing.
(f) Financing Statements. This Agreement creates in favor of the
Lender a legal, valid and enforceable Lien on the Collateral, securing the
payment of the Obligations. When financing statements have been filed in the
appropriate offices under the UCC in the
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locations listed on Schedule 4, the Lender will have a fully perfected first
priority Lien on the Collateral, except where limited or prohibited by the terms
of a Contract, provided however, that with regard to any Lien on the collateral
securing any Title XI Financing, a description of such collateral and the
respective locations to be attached hereto as Schedule 4(f), the Lender will
have a fully perfected security interest subordinate only to any security
interest securing such Title XI Financing. When the Trademark Security Agreement
has been filed in the United States Patent and Trademark Office, the Lender will
have a fully perfected first priority Lien on the Collateral, to the extent such
Lien may be perfected by the filing of such agreements in the United States
Patent and Trademark Office.
(g) No Governmental Approval. No Governmental Approval, and no notice
to any governmental agency is required either (i) for the grant of a Lien by the
Company in the Collateral pursuant to this Agreement or (ii) the exercise by the
Lender of the rights provided for in this Agreement or the remedies in respect
to the Collateral pursuant to this Agreement other than any notice and consent
required pursuant to the Title XI Financing.
(h) Trademarks. The Trademarks and any trademarks in which the
Company has been granted rights pursuant to Trademark Licenses, are subsisting
and have not been adjudged invalid or unenforceable; each of the Trademarks and
any trademark in which the Company has been granted rights pursuant to Trademark
Licenses, is valid and enforceable; to the best of the Company's knowledge, no
claim has been made that the use of any of the Trademarks or any trademark in
which the Company has been granted rights pursuant to the Trademark Licenses
does or may violate the rights of any third person; upon registration of its
Trademarks, the Company will use for the duration of this Agreement, proper
statutory notice in connection with its use of the Trademarks; and the Company
will use, for the duration of this Agreement, consistent standards of quality in
its manufacture of products sold under the Trademarks and any Trademarks in
which the Company has been granted rights pursuant to the Trademark Licenses.
(i) Patents. As of the date hereof the Company has no rights in or to
any Patents or Patent Licenses.
5. Covenants. The Company covenants and agrees with the Lender that
from and after the date of this Agreement:
(a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Company, the Company will promptly and duly execute and deliver
any and all such further instruments, documents and agreements and take such
further action as the Lender may deem necessary or desirable in order to perfect
and protect any Lien granted or purported to be granted hereby or to enable the
Lender to exercise and enforce its rights and remedies hereunder with respect to
the Collateral. Without limiting the generality of the foregoing, the Company
will (i) secure all consents and approvals necessary or appropriate for the
assignment to the Lender of any material License or material Contract held by
the Company or in which the Company has any rights,
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(ii) xxxx conspicuously each item of Chattel Paper and each related Contract and
each of its records pertaining to the Chattel Paper, with a legend, in form and
substance satisfactory to the Lender, indicating that such Chattel Paper or
related Contract is subject to the security interest granted hereby, (iii) if
any Account shall be evidenced by a promissory note or other Instrument
(including, without limitation, any Letter of Credit on which the Company is
named as a beneficiary), deliver and pledge to the Lender hereunder such
certificate, note or other Instrument duly indorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Lender, and (iv) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, in form and substance reasonably
satisfactory to the Lender, in order to perfect and preserve the security
interest granted or purported to be granted hereby. The Company hereby
authorizes the Lender to file any such financing or continuation statements
without the signature of the Company to the extent permitted by applicable law.
The Company hereby agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement to the extent permitted by applicable law. If any Inventory
is in the possession or control of any warehouseman or any of the Company's
agents or processors, the Company shall, upon the Lender's reasonable request,
notify such warehouseman, agent or processor of the Lender's security interest
in such Inventory and, upon the Lender's request, instruct them to hold all such
Inventory for the Lender's account and, from and after the occurrence of, and
during the continuance of, an Event of Default, subject to the Lender's
instructions.
(b) Location of Inventory. The Company shall keep the Inventory at
the places specified in Schedule 1 hereof, except for Inventory temporarily in
transit between such locations and, so long as no Event of Default has occurred
and is continuing, the Company may designate additional Inventory locations
within the continental United States ("Domestic Locations") by delivering
written notice to the Lender at least thirty (30) days prior to establishing any
such location, provided however, that the Company may, so long as no Event of
Default has occurred and is continuing, designate additional Inventory locations
outside of the continental United States ("Foreign Locations") with prior
written consent of the Lender, which consent may be withheld if the Company is
unable to perfect the Lender's security interest in all Collateral located at
such Foreign Location. Prior to the establishment of a Domestic Location the
Company shall cause to be made all filings under the UCC necessary or
appropriate to preserve the perfection of the security interests described
herein in the Inventory to be located at such location and to the extent that
such location is owned by any Person other than the Company, will obtain a lien
waiver with respect to such Inventory in form and substance reasonably
satisfactory to the Lender. Upon the establishment of a Domestic Location,
Schedule 1 hereto shall be deemed amended to add such location thereto without
further action by the Lender or the Company, and the Company hereby authorizes
the Lender to substitute a new Schedule 1 hereto to reflect such additional
location(s). Prior to the establishment of a Foreign Location in a country
other than the United States, the Company shall cause all requirements under
such countries' law to be satisfied such that the Lender shall have a valid and
enforceable security interest in all Collateral located in such Foreign
Location.
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(c) Location of Other Collateral. The Company will keep its principal
place of business and chief executive office and the office where it keeps all
records concerning the Collateral, and the office where it keeps all originals
of any Documents, Instruments or Chattel Paper, at the locations therefor
specified in Schedule 2 unless (i) the Company shall have given the Lender at
least thirty (30) days' prior written notice of the establishment of a new
location (which shall be within the United States) and (ii) the Company shall
have made all filings under the UCC necessary or appropriate and obtained any
Collateral Access Agreements (as determined by the Lender in its reasonable
discretion) to preserve the perfection of Lender's Lien in the Collateral. The
Company will hold and preserve such records and Documents, Instruments and
Chattel Paper and will permit representatives of the Lender, or any authorized
employee, agent or representative thereof, at any time during customary business
hours and as often as shall be reasonably requested, to inspect and make copies
and abstracts from such records and Documents, Instruments and Chattel Paper.
(d) Maintenance of Records. The Company will keep and maintain at the
Company's own cost and expense satisfactory and complete records of the
Collateral in a manner reasonably acceptable to the Lender, including, without
limitation, a record of all payments received and all credits granted with
respect to such Collateral and a record of the Lender's security interest on the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Company shall, for the Lender's further security, deliver and turn
over to the Lender or the Lender's designated representatives at any time upon
request by the Lender or the Lender's designated representative, copies of any
such books and records (including, without limitation, any and all computer
tapes, programs, and source codes relating to the Collateral or any part or
parts thereof).
(e) Indemnification. In any suit, proceeding or action brought by the
Lender relating to any Account, Chattel Paper, Contract, General Intangible or
Instrument for any sum owing thereunder, or to enforce any provision of any
Account, Chattel Paper, Contract, General Intangible or Instrument, the Company
will save, indemnify and keep the Lender harmless from and against all expense,
loss or damages suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by the Company of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from the Company, and all such
obligations of the Company shall be and remain enforceable against and only
against the Company and shall not be enforceable against the Lender.
(f) Limitations of Liens on Collateral. The Company will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral, and will
defend the right, title and interest of the Lender in and to any of the
Company's rights to the Collateral, including, without limitation, the proceeds
and products thereof, against the claims and demands of all Persons whatsoever,
excluding any Permitted Liens.
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(g) No Changes in Payments. The Company will not (i) grant any
extension of the time of payment of any of the Collateral except in the ordinary
course of business or compromise, compound or settle the same for less than the
full amount thereof except in the ordinary course of business, (ii) release,
wholly or partly, any Person liable for the payment thereof except in the
ordinary course of business, or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of business.
(h) Limitations on Disposition of Assets. The Company will not sell,
transfer, lease or otherwise dispose of any of the Collateral or contract to do
so, except to the extent permitted under the terms of the Credit Agreement.
(i) Notice of Liens, etc. The Company will advise the Lender
promptly, and in reasonable detail, of (i) any material Lien or claim made by or
asserted against any or all of the Collateral, and (ii) the occurrence of any
other event which would have a Material Adverse Effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
(j) Notice Regarding Governmental Accounts. The Company shall
promptly comply with, and continue to comply with, the Assignment of Claims Act
of 1940, as amended (31 U.S.C. (S) 3727 et seq.) and any other comparable law or
act enacted by any state or local governmental authority (collectively, the
"Assignment Laws") applicable to all Contracts and all Accounts with respect to
which the United States of America or any department, agency or instrumentality
thereof or any other state or local governmental agency is, respectively, a
party or the Account Debtor (all such Contracts and Accounts hereinafter
collectively referred to as "Government Receivables"). The Company shall
promptly deliver to the Lender evidence of such compliance, which evidence shall
be in form and substance satisfactory to the Lender. At any time when an Event
of Default has occurred and is continuing, the Company will take any action
required or requested by the Lender to give notice of the Lender's security
interest in such Government Receivables under the provisions of the Assignment
Laws.
(k) Limitations on Name Change. The Company will not change its name,
identity or corporate structure in any manner which might make any financing
statement filed hereunder seriously misleading, unless it shall have (i) given
the Lender at least fifteen (15) days' prior written notice thereof, and (ii)
certified to the Lender that all filings reflecting such new name, identity or
structure have been made which are necessary or appropriate to preserve the
perfection of the security interests described herein.
(l) Limitations on Consignment. The Company will not at any time
place Inventory with a value which, in the aggregate, exceeds $100,000, on
consignment with any Person without the Lender's prior written consent, which
consent may not be unreasonably withheld, provided however, that the Lender may
withhold consent if unable to obtain a fully perfected first priority interest
the Collateral to be consigned. If at any time during the term of
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this Agreement, any Inventory is placed by the Company on consignment with any
Person ("Consignee"), with the prior written consent of the Lender, the Company
shall, prior to the delivery of any such consigned Inventory: (i) provide the
Lender with all consignment agreements and other instruments and documentation
to be used in connection with such consignment, all of which agreements,
instruments and documentation shall be acceptable in form and substance to the
Lender, (ii) prepare, execute and file appropriate financing statements with
respect to any consigned Inventory showing the Consignee as debtor, the Company
as secured party and the Lender as assignee of secured party, (iii) prepare,
execute and file appropriate financing statements with respect to any consigned
Inventory showing the Company as debtor and the Lender as secured party, (iv)
after all financing statements referred to in clauses (ii) and (iii) above shall
have been filed, conduct a search of all filings made against the Consignee in
all jurisdictions in which the Inventory to be consigned is to be located while
on consignment, and deliver to the Lender copies of the results of all such
searches, and (v) notify, in writing, all creditors of the Consignee which are
or may be holders of security interests in the Inventory to be consigned that
the Company expects to deliver certain Inventory to the Consignee, all of which
Inventory shall be described in such notice by item or type.
(m) Covenants Regarding Patents, Trademarks. The Company shall notify
the Lender immediately if it knows or has reason to know that any Patent or any
registration relating to any Trademark which is material to the conduct of the
Company's business may become abandoned, canceled or declared invalid, or if any
Trademark or the invention disclosed in any of the Patents is dedicated to the
public domain, or of any material adverse determination in any proceeding in the
United States Patent and Trademark Office or in any United States court
regarding the Company's ownership of any Patent or Trademark which is material
to the conduct of the Company's business, its right to register the same, or to
keep and maintain the same. If the Company, either itself or through any agent,
employee, licensee or designee, applies for a Patent or files an application for
the registration of any Trademark with the United States Patent and Trademark
Office or in any analogous office or agency in any other country or any
political subdivision thereof, or otherwise obtains rights in any Patent or
Trademark, the Company will promptly inform the Lender, and, upon request of the
Lender, execute and deliver any and all agreements, instruments, documents and
papers as the Lender may request to evidence the Lender's security interest in
such Patent or Trademark and the General Intangibles used in connection
therewith, including, without limitation, in the case of Trademarks, the
goodwill of the Company's business connected with the use thereof or symbolized
thereby. Consistent with the Company's past business practice, the Company will
take all reasonably necessary actions permitted by applicable law (i) to
prosecute each Patent or Trademark application which is material to the conduct
of the company's business; (ii) to attempt to obtain the broadest Patent or
registration of a Trademark therefrom and (iii) to maintain each Patent and
Trademark registration which is material to the conduct of the Company's
business, including, without limitation, with respect to Patents, payments of
required maintenance fees, and, with respect to Trademarks, filing of
applications for renewal, affidavits of use and affidavits of incontestability.
In the event that the Company fails to take any of such actions, the Lender may
do so in the Company's name or, if an Event of Default has occurred and is
continuing in the Lender's name,
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and all expenses incurred by the Lender in connection therewith shall be paid by
the Company in accordance with Section 9 hereof. Consistent with the Company's
past business practices, the Company shall use its best efforts to detect
infringers of the Patents and Trademarks which are material to its business. In
the event that any of the Patents or Trademarks is infringed or, in the case of
any Trademark, diluted by a third party, the Company shall (i) notify the Lender
promptly after it learns thereof and (ii) unless the Company shall reasonably
determine that such Patent or Trademark is not material to the conduct of the
Company's business, to promptly take appropriate action to enjoin such
infringement or, in the case of any Trademark, dilution and to seek any and all
damages for such infringement or dilution or shall take such other actions
(including entering into licenses or covenants not to xxx) as the Company in the
exercise of its business judgment shall reasonably deem appropriate under the
circumstances to protect the Patents or Trademarks. In the event that the
Company fails to take any such actions the Lender may do so in the Company's
name or, if an Event of Default has occurred and is continuing, in the Lender's
name, and all expenses incurred by the Lender in connection therewith shall be
paid by the Company in accordance with Section 9 hereof.
(n) Covenants Regarding Contracts. The Company shall use its
reasonable efforts to ensure that all Contracts relating to the Accounts with
respect to which the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, permit the assignment by the
Company to the Lender of such Contract and any Accounts arising thereunder.
6 Insurance. (a) The Company shall at its sole cost and expense
provide and maintain in full force and effect for the benefit of the Lender,
insurance with respect to the Collateral and all parts thereof, as required
under, and on the terms and conditions set forth in, Section 5.04 of the Credit
Agreement, which terms and conditions are hereby incorporated herein by
reference as fully as if fully set forth herein.
(b) The Company hereby (i) directs all insurers under such policies of
insurance maintained hereunder and under the Credit Agreement to pay all
proceeds payable thereunder directly to the Lender, and (ii) irrevocably makes,
constitutes and appoints the Lender (and all officers, employees or agents
designated by the Lender) as the Company's true and lawful attorney (and agent-
in-fact) for the purpose of making, settling and adjusting claims under such
policies of insurance if the proceeds of such claims are to be applied to the
Obligations pursuant to the last sentence of this Section 6(b), endorsing the
name of the Company on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance which are to be applied to the
Obligations pursuant to the last sentence of this Section 6(b), and for making
all determinations and decisions with respect to such policies of insurance
which relate to proceeds to be applied to the Obligations. The Company shall
promptly notify the Lender in writing of any payment it receives of insurance
proceeds in respect of damaged or destroyed Collateral in excess of $150,000.
(c) If any insurance required to be provided hereunder shall expire,
be withdrawn, become void by breach of any condition thereof by the Company, or
become void or
-15-
questionable by reason of the failure or impairment of the capital of any
insurer, or if for any other reason whatsoever any such insurance shall become
unsatisfactory to the Lender in its reasonable credit judgment, the Company
immediately shall obtain new or additional insurance which shall be satisfactory
to the Lender in its reasonable credit judgment. The Company shall not take out
any separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to the Lender in all
respects.
(d) In the event the Company at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above or to pay
any premium in whole or in part relating thereto, the Lender, without waiving or
releasing any obligations or default by the Company hereunder, may at any time
or times thereafter (but shall not be obligated to) obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto which the Lender deems advisable. All sums so disbursed by the
Lender, including attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, on demand, by the Company to the Lender in
accordance with Section 9 hereof.
7 Collections. The Lender may at any time, on or after the
Acceleration Date, open the Company's mail and collect any and all amounts due
from Account Debtors and notify Account Debtors of the Company, parties to the
Contracts of the Company, obligors of Instruments of the Company and obligors in
respect of Chattel Paper of the Company that the Accounts and the right, title
and interest of the Company in and under such Contracts, Instruments and Chattel
Paper have been assigned to the Lender and that payments shall be made directly
to the Lender or to a lockbox designated by the Lender and upon the request of
the Lender, the Company will deposit any and all payments received on account of
any Government Receivables directly to the Lender or to a lockbox designated by
the Lender. Upon the request of the Lender on or after the Acceleration Date,
the Company will so notify such Account Debtors, parties to such Contracts,
obligors of such Instruments and obligors in respect of such Chattel Paper. The
Lender may at any time, in its own name or in the name of the Company,
communicate with such Account Debtors, parties to such Contracts, obligors of
such Instruments and obligors in respect of such Chattel Paper to verify with
such Persons to the Lender's satisfaction the existence, amount and terms of any
such Accounts, Contracts, Instruments or Chattel Paper.
8 Lender's Appointment as Attorney-in-Fact. On the Closing Date,
the Company shall execute and deliver to the Lender a power of attorney (the
"Power of Attorney") substantially in the form attached hereto as Exhibit A.
The power of attorney granted pursuant to the Power of Attorney is a power
coupled with an interest and shall be irrevocable until the Commitment
Termination Date. The powers conferred on the Lender under the Power of
Attorney are solely to protect the Lender's interest in the Collateral and shall
not impose any duty upon the Lender to exercise any such powers. The Lender
agrees that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless the Lender first declares the Note, including without
limitation, principal, accrued interest and costs of collection and all other
Obligations immediately due and payable, and (b) the Lender shall account for
any moneys
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received by the Lender in respect of any foreclosure on or disposition of the
Collateral pursuant to the Power of Attorney provided that the Lender shall not
have any duty as to any Collateral, and the Lender shall be accountable only for
amounts it actually receives as a result of the exercise of such powers. THE
LENDER OR ITS RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL NOT BE RESPONSIBLE TO THE COMPANY FOR ANY ACT OR FAILURE
TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES TO
THE EXTENT CAUSED BY THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NOR FOR
ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
9 Performance by Lender of the Company's Obligations. If the
Company fails to perform or comply promptly with any of its agreements contained
herein and the Lender, as provided for by the terms of this Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at the highest rate
then applicable under the Credit Agreement, shall be payable by the Company to
the Lender on demand and shall constitute Obligations secured hereby.
10 Rights and Remedies Upon Default. (a) If an Event of Default
shall occur and be continuing, the Lender may exercise in addition to all other
rights and remedies granted to it in this Agreement and in any other Loan
Document, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, the Company expressly agrees that on
or after the Acceleration Date, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Company or any other Person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith enter upon the premises of the Company where any Collateral
is located through self-help, without judicial process, without first obtaining
a final judgment or giving the Company notice and opportunity for a hearing on
the Lender's claim or the Lender's action, and without paying rent, and collect,
receive, assemble, process, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Lender's offices or elsewhere at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by applicable law, upon any such private sale or sales, to purchase
the whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Company hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. The
Lender shall have the right to conduct such sales on the Company's premises or
elsewhere and shall have the right to use the Company's premises without charge
for such sales for such time or times as the Lender deems necessary or
advisable. The Company further agrees, at the Lender's request on or after the
Acceleration Date, to assemble the Collateral and make it
-17-
available to the Lender at places which the Lender shall select, whether at the
Company's premises or elsewhere. Until the Lender is able to effect a sale,
lease, or other disposition of Collateral hereunder, the Lender shall have the
right to use or operate the Collateral, or any part thereof, to the extent that
it deems appropriate for the purpose of preserving Collateral or its value or
for any other purpose deemed appropriate by the Lender. The Lender shall have no
obligation to the Company to maintain or preserve the rights of the Company as
against third parties with respect to the Collateral while the Collateral is in
the possession of the Lender. The Lender may, if it so elects, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of the Lender's remedies with respect to such appointment without
prior notice or hearing. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, as provided
in Section 10(d) hereof, the Company remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by the Lender of any other amount required by any
provision of law, including Section 9-504(1)(c) of the UCC, need the Lender
account for the surplus, if any, to the Company. To the maximum extent permitted
by applicable law, the Company waives all claims, damages, and demands against
the Lender arising out of the repossession, retention or sale of the Collateral
except such as arise out of the gross negligence or wilful misconduct of the
Lender. The Company agrees that the Lender need not give more than ten (10)
days' notice (which notification shall be deemed given when given in the manner
provided in Section 13 hereof) of the time and place of any public sale or of
the time after which a private sale may take place, and that such notice is
reasonable notification of such matters. The Company shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, the Company also being liable for the
reasonable fees and expenses of any attorneys employed by the Lender to collect
such deficiency.
(b) The Company also agrees to pay all costs of the Lender, including,
without limitation, the expenses and reasonable attorneys' fees, incurred in
connection with the enforcement of any of its rights and remedies hereunder.
(c) The Company hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by the Lender in the
following order of priorities:
(i) first, to the Lender in an amount sufficient to pay in full
the reasonable expenses of the Lender in connection with such sale,
disposition or other realization, including all expenses, liabilities and
advances incurred or made by the Lender in connection therewith, including,
without limitation, reasonable attorney's fees actually incurred by the
Lender;
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(ii) second, to the Lender in an amount equal to the then unpaid
principal of and accrued interest and prepayment premiums, if any, on the
Obligations;
(iii) third, to the Lender, in an amount equal to any other
Obligations which are then unpaid; and
(iv) finally, upon payment in full of all of the Obligations, to
pay to the Company, or its representatives or as a court of competent
jurisdiction otherwise may direct, any surplus then remaining from such
Proceeds.
11 Limitation on the Lender's Duties. The powers conferred on the
Lender hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for exercising
reasonable care in the custody and preservation of Collateral in its possession
or possession of its agents or nominees and the accounting for moneys actually
received by it hereunder, the Lender shall have no duty as to any Collateral or
any income thereon or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to the Collateral. The
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Lender accords its own property.
12 Term of Agreement; Reinstatement; Assignment. This Agreement and
the Liens granted hereunder shall remain in full force and effect until (x) the
Obligations have been paid and performed in full and the Credit Agreement has
been terminated, (y) the cash collateralization in full of all contingent
obligations and liabilities (other than contingent indemnification obligations
which have not yet been asserted) and (z) the expiration or termination of the
Commitment. Further, this Agreement and the Liens granted hereunder shall
remain in full force and effect and continue to be effective should any petition
be filed by or against the Company for liquidation or reorganization, should the
Company become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations and the
cash collateral for any such contingent obligations and liabilities, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment or
performance or any such cash collateral, or any part thereof, is rescinded,
reduced, restored or returned, the Obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, reduced, restored or
returned.
13 Security Interest Absolute. All rights of the Lender and security
interests hereunder, and all obligations of the Company hereunder, shall be
absolute and unconditional irrespective of:
-19-
(i) any lack of validity or enforceability of the Loan
Documents, the other Security Documents or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations, or any other amendment
or waiver of or any consent to any departure from the Loan Documents,
including, without limitation, any increase in the Obligations resulting
from the extension of additional credit to the Company or otherwise;
(iii) any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Obligations;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or other
disposition of any collateral for all or any part of the Obligations or any
other assets of the Company;
(v) any change, restructuring or termination of the corporate
structure or existence of the Company; or
(vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Company or a third party
pledgor.
14 Use and Protection of Patent and Trademark Collateral.
Notwithstanding anything to the contrary contained herein, unless an Event of
Default has occurred and is continuing, the Lender shall from time to time
execute and deliver, upon the written request of the Company, any and all
instruments, certificates or other documents, in the form so requested,
necessary or appropriate in the judgment of the Company to permit the Company to
continue to exploit, license, use, enjoy and protect the Patents and Trademarks.
15 Amendments; Consents. No amendment, modification, supplement,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by the Company therefrom, may in any event be effective unless in
writing signed by the Lender, and then only in the specific instance and for the
specific purpose given.
16 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give or
serve upon any other party any other communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be delivered in the manner and
to the addresses set forth in Section 9.03 of the Credit Agreement.
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17 Severability; Time of Essence. Every provision of this Agreement
is intended to be severable. If any term or provision of this Agreement or any
other document delivered in connection herewith shall be unenforceable in any
respect, the enforceability of the remaining provisions shall not thereby by
affected. Time is of the essence of this Agreement.
18 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND ALL OTHER DOCUMENTS CONTEMPLATED HEREBY, AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF FLORIDA
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF FLORIDA OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF FLORIDA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.
(c) Nothing herein shall affect the right of the Lender to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.
19 Expenses. The Company shall pay all reasonable costs, expenses,
taxes and fees incurred (i) by the Lender in connection with the negotiation,
preparation, execution and delivery of this Agreement, the term sheet and
Commitment Letter relating to this Agreement, and all certificates, opinions and
other documents relating to these transactions, including, without limitation,
the disbursements and professional fees of King & Spalding, counsel to the
Lender; (ii) by the Lender in connection with the perfection, registration,
maintenance, administration, custody and preservation of the Collateral,
including, without limitation, with respect to any and all stamp, intangible or
other taxes that may be payable or determined in the future to be payable in
connection with the Loan Documents, this Agreement, the Security Documents, and
all other documents executed or delivered in connection therewith, and relating
to releases and consents; and (iii) by the Lender in connection with or after
the occurrence of any Event of Default or
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acceleration pursuant to Section 8.02 of the Credit Agreement, including,
without limitation, in connection with (a) the negotiation, preparation,
execution and delivery of any waiver, amendment or consent by the Lender
relating to the Loan Documents or the Security Documents, (b) the negotiation of
any restructuring or workout transaction, and the preparation, execution and
delivery of any documents prepared in connection therewith, and (c) enforcement
or foreclosure with respect to the Loan Documents or the Security Documents, in
all such cases such costs, expenses, taxes and fees shall include, without
limitation, the disbursements and reasonable professional fees actually incurred
of counsel to the Lender. To the extent that any such fees and expenses are
subject to value added taxes, such taxes will be paid by the Company. To the
extent reimbursement is sought pursuant to this Section or any other document
executed pursuant hereto, the Lender shall submit to the Company a statement of
expenses to be paid by the Company. Such expenses shall be due and payable
within thirty (30) days of the date of the original statement to the extent that
the Lender is entitled to such reimbursement.
20 Indemnity. The Company agrees to protect, indemnify and save
harmless the Lender, and all directors, officers, employees and agents of the
Lender, from and against any and all (i) claims, demands and causes of action of
any nature whatsoever brought by any Person not a party to this Agreement and
arising from or related or incident to this Agreement or any other Loan
Document, (ii) costs and expenses incident to the defense of such claims,
demands and causes of action, including, without limitation, reasonable
attorneys' fees, and (iii) liabilities, judgments, settlements, penalties and
assessments arising from such claims, demands and causes of action, provided
such claims, costs and liabilities are not the result of the gross negligence or
willful misconduct of the Lender. The indemnity contained in this Section shall
survive the termination of this Agreement.
21 Further Indemnification. The Company agrees to pay, and to save
the Lender harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all excise, sales or other similar taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
22 Benefit of the Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that the Company may not assign or
transfer any of its interest hereunder without the prior written consent of the
Lender, and no such assignment or transfer of any such obligations shall relieve
the Company of its obligations hereunder unless the Lender shall have consented
to such release in a writing specifically referring to the obligation from which
the Company is to be released. Without limiting the generality of the
foregoing, the Lender may assign or otherwise transfer all or any portion of its
rights and obligations under this Agreement, to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Lender herein or otherwise, subject, however, to Section 9.08 of
the Credit Agreement (concerning assignments and participations).
-22-
23 Entire Agreement. This Agreement and the other Loan Documents
executed and delivered contemporaneously herewith, together with the exhibits
and schedules attached hereto and thereto, constitute the entire understanding
of the parties with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto;
provided, however, that the indemnities of the Company in favor of the Lender
contained in the Commitment Letter shall survive the execution and delivery of
this Agreement. The execution of this Agreement and the other Loan Documents by
the Company was not based upon any facts or materials provided by the Lender,
nor was the Company induced to execute this Agreement or any other Loan Document
by any representation, statement or analysis made by the Lender.
24 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
-23-
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set
forth above.
OMEGA PROTEIN CORPORATION,
a Nevada corporation
Address: By:
Omega Protein Corporation -------------------------------------
0000 Xx. Xxxxx Xxxxx, Xxxxx 000 Name:
Xxxxxxx, Xxxxx 00000 ------------------------------
Telecopier No.: (000) 000-0000 Title:
Confirmation No.: (000) 000-0000 -----------------------------
Attest:
---------------------------------
Name:
----------------------------
Title:
---------------------------
OMEGA PROTEIN, INC.
a Virginia corporation
Address: By:
Omega Protein, Inc. -------------------------------------
0000 Xx. Xxxxx Xxxxx, Xxxxx 000 Name:
Xxxxxxx, Xxxxx 00000 -----------------------------------
Telecopier No.: (000) 000-0000 Title:
Confirmation No.: (000) 000-0000 ----------------------------------
Attest:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
[SIGNATURE PAGE TO SECURITY AGREEMENT (COMPANY)]
Accepted and Acknowledged by:
SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[SIGNATURE PAGE TO SECURITY AGREEMENT (COMPANY)]
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by OMEGA PROTEIN
CORPORATION, INC., a Nevada corporation, and OMEGA PROTEIN, INC., a Virginia
corporation (collectively, the "Company") to SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION, a national banking association (hereinafter referred to as
"Attorney"), pursuant to the Security Agreement, dated as of August 11, 1998, by
the Company in favor of the Attorney. No person to whom this Power of Attorney
is presented, as authority for the Attorney to take any action or actions
contemplated hereby, shall be required to inquire into or seek confirmation from
the Company as to the authority of the Attorney to take any action described
below, or as to the existence of or fulfillment of any condition to this Power
of Attorney, which is intended to grant to the Attorney unconditionally the
authority to take and perform the actions contemplated herein, and the Company
irrevocably waives any right to commence any suit or action, in law or equity,
against any Person which acts in reliance upon or acknowledges the authority
granted under this Power of Attorney. The power of attorney granted hereby is
coupled with an interest, and may not be revoked or canceled by the Company
without the Attorney's written consent.
The Company hereby irrevocably constitutes and appoints the Attorney
(and all officers, employees or agents designated by the Attorney), with full
power of substitution, as the Company's true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Company and
in the name of the Company or in its own name, from time to time in the
Attorney's discretion, to, on or after the Acceleration Date, take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
the Security Documents and, without limiting the generality of the foregoing,
the Company hereby grants to the Attorney the power and right, on behalf of the
Company, without notice to or assent by the Company, and at any time, to do the
following: (a) change the mailing address of the Company, open a post office box
on behalf of the Company, open mail for the Company, and ask, demand, collect,
give acquittances and receipts for, take possession of, endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, and notices in connection with any
property of the Company; (b) effect any repairs to any asset of the Company, or
continue to obtain any insurance and pay all or any part of the premiums
therefor and costs thereof, and make, settle and adjust all claims under such
policies of insurance, and make all determinations and decisions with respect to
such policies; (c) pay or discharge any taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the Company or its
property; (d) defend any suit, action or proceeding brought against the Company
if the Company does not defend such suit, action or proceeding or if the
Attorney believes that the Company is not pursuing such defense in a manner that
will maximize the recovery to the Attorney, and settle, compromise or adjust any
suit, action, or proceeding described above and, in connection therewith, give
such discharges or releases as the Attorney may deem appropriate; (e) file or
prosecute any claim, litigation, suit or proceeding in any court of competent
jurisdiction or before any arbitrator, or take any other action otherwise deemed
appropriate by the Attorney for the purpose of collecting any and all such
moneys due to the Company whenever payable and to
enforce any other right in respect of the Company's property; (f) cause the
certified public accountants then engaged by the Company to prepare and deliver
to the Attorney at any time and from time to time, promptly upon the Attorney's
request, the following reports: (a) a reconciliation of all accounts; (2) an
aging of all accounts, (3) trial balances, (4) test verifications of such
accounts as the Attorney may request, and (5) the results of each physical
verification of inventory; (g) communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and interest of the
Company in and under the Contracts and other matters relating thereto; and (h)
execute, in connection with sale provided for in any Security Document, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral and to otherwise direct such sale or resale, all as
though the Attorney were the absolute owner of the property of the Company for
all purposes, and to do, at the Attorney's option and the Company's expense, at
any time or from time to time, all acts and other things that the Attorney
reasonably deems necessary to perfect, preserve, or realize upon the Company's
property or assets and Attorney's Liens thereon, all as fully and effectively as
the Company might do. The Company hereby ratifies, to the extent permitted by
law, all that said the Attorney shall lawfully do or cause to be done by virtue
hereof.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, this Power of Attorney is executed by the Company,
and the Company has caused its seal to be affixed pursuant to the authority of
its board of directors this 11th day of August, 1998.
Signed, sealed and delivered OMEGA PROTEIN CORPORATION, a Nevada
on this 11th day of August, 1998. corporation
By:
Name:
Title:
Unofficial Witness Attest:
---------------------------------
Name:
Title:
Notary Public
Commission Expiration Date:
OMEGA PROTEIN, INC., a Virginia
corporation
By:
-------------------------------------
Name:
Title:
Attest:
---------------------------------
Name:
Title:
[CORPORATE SEAL]
[SIGNATURE PAGE TO POWER OF ATTORNEY]
Accepted by:
SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
By:
-------------------------------
Name:
Title:
[SIGNATURE PAGE TO POWER OF ATTORNEY]
SCHEDULE 1
TO
SECURITY AGREEMENT
LOCATIONS OF INVENTORY AND STATUS
---------------------------------
SCHEDULE 2
TO
SECURITY AGREEMENT
LOCATIONS OF BOOKS AND RECORDS
------------------------------
SCHEDULE 3
TO
SECURITY AGREEMENT
PREVIOUS COMPANY NAMES AND TRADE NAMES
--------------------------------------
SCHEDULE 4
TO
SECURITY AGREEMENT
UCC FINANCING STATEMENTS
------------------------
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
TITLE XI FINANCING COLLATERAL
-----------------------------
SCHEDULE 5
TO
SECURITY AGREEMENT
ACCOUNTS
--------
