Exhibit 4.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made as of September 12, 1997, between WESTERN
PACIFIC AIRLINES, INC., a Delaware corporation, with principal offices at 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("DEBTOR"); and
BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association, with
offices at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx ("SECURED PARTY").
RECITALS
A. Secured Party has made a loan to Debtor in the original principal
amount of Ten Million Dollars ($10,000,000) (the "LOAN") as evidenced by that
certain promissory note of even date herewith (together with all extensions for
any period, renewals, rearrangements and/or increases thereof, the "NOTE"),
executed by Debtor and payable to the order of Secured Party with interest as
provided therein.
B. Therefore, in order to secure the Obligations, as hereinafter defined,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Debtor hereby agrees with Secured Party as
follows:
ARTICLE 1
SECURITY INTEREST
Section 1.1 GRANT OF SECURITY INTEREST. Debtor hereby assigns and
grants to Secured Party a security interest in and right of set-off against the
Collateral (defined to in Section 1.2) to secure the prompt payment and
performance of the Obligations (defined in Section 2.2) and the performance by
Debtor of this Agreement.
Section 1.2 COLLATERAL. The "COLLATERAL" consists of the following
types or items of property (including property hereafter acquired by Debtor as
well as property which Debtor now owns or in which Debtor has rights):
(a) All accounts, instruments, documents, chattel paper, and general
intangibles arising in the ordinary course of Debtor's business from or in
connection with the sale of tickets for air travel, and delivery of cargo,
including, without limitation, sales directly made by Debtor or through
interline ticket sales, and sales and accounts arising from travel agents, cargo
shippers, and the Airline Reporting Corporation, and those arising through a
clearinghouse arrangement, interline arrangement, other type of intermediary
arrangement, or otherwise, but excluding any accounts held in bank accounts of
Debtor arising from credit card receivables.
(b) Account No. 1822932701 maintained by Debtor with Secured Party,
and all funds, instruments, investments, documents, chattel paper, general
intangibles, and certificates maintained therein or related thereto.
(c) Account No. 000-0-000000 maintained at The Chase Manhattan Bank,
N.A., and all funds, instruments, investments, documents, chattel paper, general
intangibles, and certificates maintained therein or related thereto.
(d) all general intangibles, rights and claims relating to and
interests in all or any of the foregoing, and proceeds of all or any of the
foregoing, including any accounts held in bank accounts of Debtor arising from
credit card receivables.
It is expressly contemplated that additional property may from time to time be
pledged, assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for all
purposes hereof to include all such additional property, together with all other
property of the types described above related thereto.
ARTICLE 2
DEFINITIONS
Section 2.1 TERMS DEFINED ABOVE. As used in this Agreement, the terms
defined above shall have the meanings respectively assigned to them.
Section 2.2 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"ACCOUNT DEBTOR" means any person or entity liable (whether directly
or indirectly, primarily or secondarily) for the payment or performance of
any obligations included in the Collateral, whether as an account debtor
(as defined in the Code), obligor on an instrument, issuer of documents or
securities, guarantor or otherwise.
"AGREEMENT" means this Security Agreement, as the same may from time
to time be amended or supplemented.
"CODE" means the Uniform Commercial Code as presently in effect in the
State of Texas, Business and Commerce Code, Chapters 1 through 9. Unless
otherwise indicated by the context herein, all uncapitalized terms which
are defined in the Code shall have their respective meanings as used in
Chapter 9 of the Code.
"EVENT OF DEFAULT" means a default under any of the Loan Documents
after the expiration of any applicable cure period (if any), demand is made
for payment of the Note, or both.
"HIGHEST LAWFUL RATE" means the maximum rate of nonusurious interest
allowed from time to time by applicable law.
"OBLIGATIONS" means all present and future liabilities, obligations,
covenants, duties and indebtedness of Debtor to Secured Party under the
Note, this Agreement, any other agreement evidencing or securing the
indebtedness evidenced by the Note, and any and all renewals, extensions
for any period, rearrangements or enlargements of the foregoing
(collectively, the "LOAN DOCUMENTS"). The Obligations shall also include
all interest, charges, expenses, attorneys' or other fees and any other
sums payable to or incurred by Secured Party in connection with the
execution, administration or enforcement of Secured Party's rights and
remedies under the Loan Documents.
"OBLIGOR" means any person or entity, other than Debtor, liable
(whether directly or indirectly, primarily or secondarily) for the payment
or performance of any of the Obligations whether as maker, co-maker,
endorser, guarantor, accommodation party, general partner or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.1 OWNERSHIP OF COLLATERAL; ENCUMBRANCES; VALID AND BINDING
AGREEMENT. Debtor is the legal and beneficial owner of the Collateral free and
clear of any adverse claim, lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement, and
Debtor has full right, power and authority to assign and grant a security
interest in the Collateral to Secured Party. This Agreement constitutes a
legal, valid and binding obligation of Debtor enforceable against Debtor in
accordance with its terms. The execution, delivery and performance of this
Agreement will not violate the terms of any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which Debtor is
subject and does not require the consent or approval of any other person or
entity. However, Secured Party acknowledges that Debtor has granted a security
interest in and to the Collateral to Xxxx Petroleum Corporation and GFI Company
(the "SUBORDINATE SECURITY INTEREST"), which security interest is subordinate to
the security interest granted hereunder, and Secured Party consents thereto.
Section 3.2 NO REQUIRED CONSENT. No authorization, consent, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body (other than the filing of financing statements) is required
for (a) the due execution, delivery and performance by Debtor of this Agreement,
(b) the grant by Debtor of the security interest granted by this Agreement,
(c) the perfection of such security interest or (d) the exercise by Secured
Party of its rights and remedies under this Agreement.
Section 3.3 SECURITY INTEREST. The grant of the security interest in
the Collateral pursuant to this Agreement creates a valid security interest in
the Collateral, enforceable against Debtor and all third parties and securing
payment of the Obligations.
Section 3.4 NO FILINGS BY THIRD PARTIES. No financing statement or
other public notice or recording covering the Collateral is on file in any
public office (other than any financing statement or other public notice or
recording naming Secured Party as the secured party therein), and Debtor will
not execute any such financing statement or other public notice or recording so
long as any of the Obligations are outstanding. However, Secured Party hereby
acknowledges that Xxxx Petroleum and GFI Company have filed a financing
statement in respect of the Collateral, and Secured Party consents thereto.
Section 3.5 LOCATION OF DEBTOR. Debtor's chief executive office and
Debtor's records concerning the Collateral are located at the address or
location set forth in the opening paragraph hereof.
Section 3.6 FINANCIAL STATEMENTS; COLLATERAL.
(a) All financial statements of Debtor provided by Debtor to Secured
Party in connection with this Agreement or the Obligations fairly present, in
conformity with generally accepted accounting principles, Debtor's financial
position and results of operations as of the dates and for the periods stated
therein (on a consolidated basis where so indicated).
(b) All statements or other information provided by Debtor to Secured
Party describing or with respect to the Collateral is or (in the case of
subsequently furnished information) will be when provided correct and complete
in all material respects. The delivery at any time by Debtor to Secured Party
of additional Collateral or of additional descriptions of Collateral shall
constitute a representation and warranty by Debtor to Secured Party hereunder
that the representations and warranties of this Article 3 are correct insofar as
they would pertain to such Collateral or the descriptions thereof.
Section 3.7 ACCOUNTS.
(a) To Debtor's knowledge, each account described in Section 1.2
represents the genuine, valid and legally enforceable indebtedness of an Account
Debtor arising from the sale, lease or rendition by Debtor of goods or services
and is not and will not be subject to contra accounts, set-offs, defenses,
counterclaims, allowances or adjustments (other than discounts for prompt
payment shown on the invoice), or objections or complaints by the Account Debtor
concerning its liability on the Account, other than the settlement adjustments
made pursuant to the Agreement Relating to Settlement of Interline Accounts
through Airlines Clearing House, Inc., dated as of February 1, 1948, between
Airlines Clearing House, Inc. and its several stockholders (Rev. October 1,
1986), as amended, and all rules and regulations applicable thereto (the "ACH
DOCUMENTS").
(b) Debtor has no knowledge of any bankruptcy, insolvency or other
action affecting creditors' rights with respect to any Account Debtor.
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and agreements contained
in this Article 4, from the date hereof and for so long as any part of the
Obligations are outstanding.
Section 4.1 CHANGE IN LOCATION OF COLLATERAL OR DEBTOR. Debtor will
notify Secured Party on or before the date of any change in location of the
Collateral. Debtor will not, without Secured Party's prior written consent,
change the location of the Collateral to any state, county or other jurisdiction
in which Secured Party has not already filed a financing statement or taken
other necessary steps to perfect its security interests in the Collateral or to
maintain such perfection. Debtor will give Secured Party 30 days' prior written
notice of (a) the opening or closing of any place of Debtor's business or
(b) any change in the location of Debtor's chief executive office or address.
Section 4.2 CHANGE IN DEBTOR'S NAME OR CORPORATE STRUCTURE. Debtor
will not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) without notifying Secured Party of such change in writing at least 30
days prior to the effective date of such change.
Section 4.3 DOCUMENTS; COLLATERAL IN POSSESSION OF THIRD PARTIES. If
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, Debtor will cause the interest of
Secured Party to be properly noted thereon and will, forthwith upon receipt,
deliver same to Secured Party.
Section 4.4 DELIVERY OF LETTERS OF CREDIT AND INSTRUMENTS. If any
Collateral becomes evidenced by a promissory note, trade acceptance or any other
instrument for the payment of money (other than checks or drafts in payment of
Collateral collected by Debtor in the ordinary course of business prior to
notification by Secured Party under Section 5.8), Debtor will immediately
deliver such instrument to Secured Party appropriately endorsed and, regardless
of the form of presentment, demand, notice of dishonor, protest and notice of
protest with respect thereto, Debtor will remain liable thereon until such
instrument is paid in full.
Section 4.5 MAINTENANCE OF EXISTENCE. Debtor will maintain Debtor's
corporate existence and remain in good standing and qualified to do business in
all jurisdictions pursuant to the laws of which it is so required.
Section 4.6 SALE, DISPOSITION OR ENCUMBRANCE OF COLLATERAL. Except
with Secured Party's prior written consent and except for the Subordinate
Security Interest, Debtor will not in any way encumber any of the Collateral (or
permit or suffer any of the Collateral to be
encumbered) or sell, assign, lend, rent, lease or otherwise dispose of or
transfer any of the Collateral to or in favor of any person or entity other than
Secured Party.
Section 4.7 PROCEEDS OF COLLATERAL. Except as permitted by
Sections 4.4 and 4.13, Debtor will deliver to Secured Party promptly upon
receipt all proceeds delivered to Debtor from the sale or disposition of any
Collateral. If chattel paper, documents or instruments are received as
proceeds, which are required to be delivered to Secured Party, they will be,
immediately upon receipt, properly endorsed or assigned and delivered to Secured
Party as Collateral. This Section 4.7 shall not be construed to permit sales or
dispositions of Collateral except as may be elsewhere expressly permitted by
this Agreement.
Section 4.8 PAYMENT OF TAXES AND LIENS. Debtor will pay prior to
delinquency all taxes, charges, liens and assessments against the Collateral.
Section 4.9 RECORDS AND INFORMATION. Debtor shall keep accurate and
complete records of the Collateral (including proceeds).
Section 4.10 REIMBURSEMENT OF EXPENSES. Debtor will pay to Secured
Party all advances, charges, costs and expenses (including, without limitation,
all costs and expenses of retaking, holding, preparing for sale and selling,
collecting or otherwise realizing upon the Collateral if an Event of Default
occurs and all attorneys' fees, legal expenses and court costs) incurred by
Secured Party in connection with the exercise of Secured Party's rights and
remedies hereunder. Debtor hereby assumes all liability for the Collateral, the
security interests created hereunder and any use, possession, maintenance,
management, enforcement or collection of any or all of the Collateral. Debtor
agrees to indemnify and hold Secured Party harmless from and against and
covenants to defend Secured Party against any and all losses, damages, claims,
costs, penalties, liabilities and expenses, including, without limitation, court
costs and attorneys' fees, incurred because of, incident to, or with respect to
the Collateral (including, without limitation, any use, possession, maintenance
or management thereof, or any injuries to or deaths of persons or damage to
property). All amounts for which Debtor is liable pursuant to this Section 4.10
shall be due and payable by Debtor to Secured Party upon demand. If Debtor
fails to make such payment upon demand (or if demand is not made due to an
injunction or stay arising from bankruptcy or other proceedings) and Secured
Party pays such amount, the same shall be due and payable by Debtor to Secured
Party, plus interest thereon from the date of Secured Party's demand (or from
the date of Secured Party's payment if demand is not made due to such
proceedings) at the Highest Lawful Rate.
Section 4.11 FURTHER ASSURANCES. Upon the request of Secured Party,
Debtor shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.12 INSURANCE. Debtor shall maintain, with financially sound
and reputable insurers, insurance satisfactory in all respects to Secured Party
covering all insurable risks
with respect to the Collateral, including standard extended coverage, in an
amount at least equal to the value of the Collateral. Policies evidencing any
such insurance shall contain a standard mortgagee's endorsement providing for
payment of any loss to Secured Party, and such policies shall further provide
for 30 days' minimum written cancellation notice to Secured Party. Debtor shall
furnish evidence satisfactory to Secured Party of compliance with these
insurance provisions.
Section 4.13 ACCOUNTS. Except in the ordinary course of business
consistent with past practices, Debtor will not modify, extend, or substitute
any contract, the terms of which shall at any time give rise to an Account
without the prior written consent of Secured Party. Additionally, Debtor shall
not adjust, settle, discount or compromise any of the Accounts without the prior
written consent of Secured Party or as otherwise specified in the ACH Documents.
Section 4.14 CONDITION OF COLLATERAL. Debtor will not use any
Collateral in violation of any law, statute, ordinance, regulation or
administrative order, or suffer it to be so used.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.1 NON-JUDICIAL ENFORCEMENT. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
Section 5.2 DISCHARGE ENCUMBRANCES. Secured Party may, at its option,
discharge any taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, may pay for insurance on the Collateral and
may pay for the maintenance and preservation of the Collateral. Debtor agrees
to reimburse Secured Party upon demand for any payment so made, plus interest
thereon from the date of Secured Party's demand at the Highest Lawful Rate.
Section 5.3 ATTORNEY-IN-FACT. From and after an Event of Default,
Debtor hereby irrevocably appoints Secured Party as Debtor's attorney-in-fact,
with full authority in the place and stead of Debtor and in the name of Debtor
or otherwise, from time to time in Secured Party's discretion, but at Debtor's
cost and expense and without notice to Debtor to:
(a) obtain, adjust, sell and cancel any insurance with respect to the
Collateral and endorse any draft drawn by insurers of the Collateral, and
Secured Party may apply any proceeds or unearned premiums of such insurance to
the Obligations (whether or not due);
(b) take any action and to execute any assignment, certificate,
financing statement, notification, document or instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Debtor representing any payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same;
and
(c) receive, change the address for delivery, open and dispose of
mail addressed to Debtor, and to execute, assign and endorse negotiable and
other instruments for the payment of money, documents of title or other
evidences of payment, shipment or storage for any form of Collateral on behalf
of and in the name of Debtor.
Section 5.4 TRANSFER OF COLLATERAL. Secured Party may transfer any or
all of the Obligations, and upon any such transfer Secured Party may transfer
its interest in any or all of the Collateral and shall be fully discharged
thereafter from all liability therefor. Any transferee of the Collateral shall
be vested with all rights, powers and remedies of Secured Party hereunder.
Section 5.5 CUMULATIVE AND OTHER RIGHTS. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off.
Section 5.6 DISCLAIMER OF CERTAIN DUTIES.
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Debtor hereby agrees that Secured
Party shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Secured Party's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the
Collateral.
(b) Secured Party shall be under no duty whatsoever to make or give
any presentment, notice of dishonor, protest, demand for performance, notice of
non-performance, notice of intent to accelerate, notice of acceleration, or
other notice or demand in connection with any Collateral or the Obligations, or
to take any steps necessary to preserve any rights against any Obligor, Account
Debtor or other person or entity. Debtor waives any right of marshaling in
respect of any and all Collateral, and waives any right to require Secured Party
to proceed against any Obligor, Account Debtor or other person or entity,
exhaust any Collateral or enforce any other remedy which Secured Party now has
or may hereafter have against any Obligor or other person or entity.
Section 5.7 MODIFICATION OF OBLIGATIONS; OTHER SECURITY. Debtor waives
(a) any and all notice of acceptance, creation, modification, rearrangement,
renewal or extension for any period of any instrument executed by any Obligor in
connection with the Obligations and (b) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of any
Obligor or for any other reason. Debtor authorizes Secured Party, without
notice or demand and without any reservation of rights against Debtor and
without affecting Debtor's liability hereunder or on the Obligations, from time
to time to (1) take and hold other property, other than the Collateral, as
security for the Obligations, and exchange, enforce, waive and release any or
all of the Collateral, (2) apply the Collateral in the manner permitted by this
Agreement and (3) renew, extend for any period, accelerate, amend or modify,
supplement, enforce, compromise, settle, waive or release the obligations of any
Obligor or any instrument or agreement of such other person or entity with
respect to any or all of the Obligations or Collateral.
Section 5.8 ACCOUNT DEBTORS. Secured Party may notify or require
Debtor to notify Account Debtors that the Accounts have been assigned to Secured
Party and direct such Account Debtors to make payments on the Accounts directly
to Secured Party. To the extent Secured Party does not so elect, Debtor shall
continue to collect the Accounts. Secured Party or its designee shall also have
the right, in its own name or in the name of Debtor, to do any of the following:
(a) to demand, collect, receipt for, settle, compromise any amounts due, give
acquittances for, prosecute or defend any action which may be in relation to any
monies due or to become due by virtue of, the Accounts; (b) to sell, transfer or
assign or otherwise deal in the Accounts or the proceeds thereof or the related
goods, as fully and effectively as if Secured Party were the absolute owner
thereof; (c) to extend the time of payment of any of the Accounts, to grant
waivers and make any allowance or other adjustment with reference thereto;
(d) to endorse the name of Debtor on notes, checks or other evidences of
payments on Collateral that may come into possession of Secured Party; (e) to
take control of cash and other proceeds of any Collateral; (f) to sign the name
of Debtor on any invoice or xxxx of lading relating to any Collateral, or any
drafts against Account Debtors or other persons making payment with respect to
Collateral; (g) to send a request for verification of Accounts to any Account
Debtor; and (h) to do all other acts and things necessary to carry out the
intent of this Agreement. In the event that Secured Party exercises its right
to settle or adjust any disputes or claims with Account Debtors on behalf of
Debtor for an amount less than the original Account in dispute, Secured Party
shall not be obligated to credit the Obligations in an amount in excess of the
amount that Secured Party receives as payment on such disputed Account. Any
exercise by Secured Party of its rights in and to the Accounts shall, as may be
applicable, be a full and complete release, discharge and acquittance of the
Account Debtor with respect to such Account, and Debtor shall take any action as
may be required by Secured Party in connection therewith. No Account Debtor
shall ever be bound to make inquiry as to the termination of this Agreement or
the rights of Secured Party to act hereunder, but shall be fully protected by
Debtor in making payment directly to Secured Party.
Section 5.9 PROCEEDS. If so requested by Debtor, any payments received
by Secured Party on the Accounts or as proceeds of other Collateral shall upon
final collection by Secured Party be credited towards payment of the
Obligations. In the absence of such request from Debtor, and until so
requested, Secured Party may at Secured Party's option either (a) hold such
collected payments as cash Collateral (and Secured Party may at any time place a
hold or freeze on all or a part of any deposit account of Debtor containing
deposits of such payments up to the amount of such deposits) or (b) credit such
collected payments towards payment of the Obligations whether such Obligations
are due or not.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.1 REMEDIES. Upon the occurrence and during the continuance
of any Event of Default, Secured Party may take any or all of the following
actions without notice (except where expressly required below) or demand to
Debtor:
(a) Declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment of the same by
Debtor or any Obligor.
(b) Take possession of the Collateral, or at Secured Party's request
Debtor shall, at Debtor's cost, assemble the Collateral and make it available at
a location to be specified by Secured Party which is reasonably convenient to
Debtor and Secured Party. Secured Party may, at its option, render any
equipment unusable that may be included in the Collateral, or, at Secured
Party's request, Debtor will render it unusable. In any event, Debtor shall
bear the risk of accidental loss or damage to or diminution in value of the
Collateral, and Secured Party shall have no liability whatsoever for failure to
obtain or maintain insurance, nor to determine whether any insurance ever in
force is adequate as to amount or as to risk insured.
(c) Sell or lease, in one or more sales or leases and in one or more
parcels, or otherwise dispose of any or all of the Collateral in its then
condition or in any other commercially reasonable manner as Secured Party may
elect, in a public or private transaction, at any location as deemed reasonable
by Secured Party (including, without limitation, Debtor's premises), either for
cash or credit or for future delivery at such price as Secured Party may deem
fair, and (unless prohibited by the Code, as adopted in any applicable
jurisdiction) Secured Party may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Obligations secured
hereby. Any such sale or transfer by Secured Party either to itself or to any
other person or entity shall be absolutely free from any claim of right by
Debtor, including any equity or right of redemption, stay or appraisal which
Debtor has or may have under any rule of law, regulation or statute now existing
or hereafter adopted. Upon any such sale or transfer, Secured Party shall have
the right to deliver, assign and transfer to the purchaser or transferee thereof
the Collateral so sold or transferred. It shall not be necessary that the
Collateral or any part thereof be present at the location of any such sale or
transfer. Secured Party may, at its discretion, provide for a public sale, and
any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as Secured Party may fix in the
notice of such sale. Secured Party shall not be obligated to make any sale
pursuant to any such notice. Secured Party may, without notice or publication,
adjourn any public or private sale by announcement at any time and place fixed
for such sale, and such sale may be made at any time or place to which the same
may be so adjourned. In the event any sale or transfer hereunder is not
completed or is defective in the opinion of Secured Party, such sale or transfer
shall not exhaust the rights of Secured Party hereunder, and Secured Party shall
have the right to cause one or more subsequent sales or transfers to be made
hereunder. In the event that any of the Collateral is sold or transferred on
credit, or to be held by Secured Party for future delivery to a purchaser or
transferee, the Collateral so sold or transferred may be retained by Secured
Party until the purchase price or other consideration is paid by the purchaser
or transferee thereof, but in the event that such purchaser or transferee fails
to pay for the Collateral so sold or transferred or to take delivery thereof,
Secured Party shall incur no liability in connection therewith. If only part of
the Collateral is sold or transferred such that the Obligations remain
outstanding (in whole or in part), Secured Party's rights and remedies hereunder
shall not be exhausted, waived or modified, and Secured Party is specifically
empowered to make one or more successive sales or transfers until all the
Collateral shall be sold or transferred and all the Obligations are paid. In
the event that Secured Party elects not to sell the Collateral, Secured Party
retains its rights to lease or otherwise dispose of or utilize the Collateral or
any part or parts thereof in any manner authorized or permitted by law or in
equity, and to apply the proceeds of the same towards payment of the
Obligations. Each and every method of disposition of the Collateral described
in this Section 6.1(c) or in Section 6.1(f) shall constitute disposition in a
commercially reasonable manner.
(d) Take possession of all books and records of Debtor pertaining to
the Collateral. Secured Party shall have the authority to enter upon any real
property or improvements thereon in order to obtain any such books or records,
or any Collateral located thereon, and remove the same therefrom without
liability.
(e) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the Code or
otherwise permitted by law or in equity. Such application may include, without
limitation, the reasonable expenses of retaking, holding, preparing for sale or
other disposition, and the reasonable attorneys' fees and legal expenses
incurred by Secured Party.
(f) Appoint any person or entity as agent to perform any act or acts
necessary or incident to any sale or transfer by Secured Party of the
Collateral. Additionally, any sale or transfer hereunder may be conducted by an
auctioneer or any officer or agent of Secured Party.
(g) Apply and set-off (1) any deposits of Debtor now or hereafter
held by Secured Party; (2) all claims of Debtor against Secured Party, now or
hereafter existing; (3) any other property, rights or interests of Debtor which
come into the possession or custody or under the control of Secured Party; and
(4) the proceeds of any of the foregoing as if the same were included in the
Collateral. Secured Party agrees to notify Debtor promptly after any such
set-off or application; provided, however, the failure of Secured Party to give
any notice shall not affect the validity of such set-off or application.
(h) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.2 LIABILITY FOR DEFICIENCY. If any sale or other disposition
of Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release Debtor
from its liability to Secured Party for any unpaid Obligations, including costs,
charges and expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable to Secured
Party at Secured Party's address set forth in the opening paragraph hereof.
Section 6.3 REASONABLE NOTICE. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Debtor hereby agrees that five days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.1 NOTICES. Any notice required or permitted to be given
under or in connection with this Agreement shall be in writing and shall be
mailed by first class or express mail, postage prepaid, or sent by telex,
telegram, telecopy or other similar form of rapid written transmission or
personally delivered to the receiving party. All such communications shall be
mailed, sent or delivered at the address respectively indicated in the opening
paragraph hereof or at such other address as either party may have furnished the
other party in writing. Any communication so addressed and mailed shall be
deemed to be given when so mailed, any notice so sent by rapid written
transmission shall be deemed to be given when receipt of such transmission is
acknowledged by the receiving operator or equipment, and any communication so
delivered in person shall be deemed to be given when receipted for or actually
received by Debtor or Secured Party, as the case may be.
Section 7.2 AMENDMENTS AND WAIVERS. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Debtor or any Obligor, or of any right, power or
remedy of Secured Party; and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof. Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Debtor hereby agrees that if Secured
Party agrees to a waiver of any provision hereunder, or an exchange of or
release of the Collateral, or the addition or release of any Obligor or other
person or entity, any such action shall not constitute a waiver of any of
Secured Party's other rights or of Debtor's obligations hereunder. This
Agreement may be amended only by an instrument in writing executed jointly by
Debtor and Secured Party and may be supplemented only by documents delivered or
to be delivered in accordance with the express terms hereof.
Section 7.3 COPY AS FINANCING STATEMENT. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.4 POSSESSION OF COLLATERAL. Secured Party shall be deemed to
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.5 REDELIVERY OF COLLATERAL. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Debtor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be liable for
any interest, cost or expense in connection with any delay in delivering such
proceeds to Debtor.
Section 7.6 GOVERNING LAW; JURISDICTION. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of Texas (except to the extent that the laws
of any other jurisdiction govern the perfection and priority of the security
interests granted hereby). Debtor consents to and submits to in personam
jurisdiction and venue in the state district and county courts of the county
wherein Secured Party's offices are located at the address specified in the
opening paragraph hereof, and in the Federal District Courts of the district
wherein such offices of Secured Party are located. This submission to
jurisdiction is nonexclusive and does not preclude Secured Party from obtaining
jurisdiction over Debtor or the Collateral in any court otherwise having
jurisdiction.
Section 7.7 CONTINUING SECURITY AGREEMENT.
(a) This Agreement shall constitute a continuing security agreement,
and all representations and warranties, covenants and agreements shall, as
applicable, apply to all future as well as existing transactions. Provisions of
this Agreement, unless by their terms exclusive, shall be in addition to other
agreements between the parties.
(b) Except as may be expressly applicable pursuant to Section 9.505
of the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any action taken or inaction pursuant to
Section 6.1, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until
Secured Party shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full amount then
outstanding or until such subsequent time as is hereinafter provided in
Section 7.7(c).
(c) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other person or entity under any bankruptcy law, common
law or equitable cause, then to such extent the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.8.
(d) In the event that the Obligations are structured such that there
are times when no Indebtedness is owing thereunder, this Agreement shall remain
valid and in full force and effect
as to all subsequent indebtedness included in the Obligations, provided Secured
Party has not in the interim period executed a written release or termination
statement or returned possession of or reassigned the Collateral to Debtor.
Section 7.8 TERMINATION. The grant of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall remain in full force and effect until Secured Party has retransferred and
delivered all Collateral in its possession to Debtor, and executed a written
release or termination statement and reassigned to Debtor without recourse or
warranty any remaining Collateral and all rights conveyed hereby. Upon the
complete payment of the Obligations and the compliance by Debtor with all
covenants and agreements hereof, Secured Party, at the written request and
expense of Debtor, will release, reassign and transfer the Collateral to Debtor
and declare this Agreement to be of no further force or effect. Notwithstanding
the foregoing, the reimbursement and indemnification provisions of Section 4.10
and the provisions of Section 7.7(c) shall survive the termination of this
Agreement.
Section 7.9 COUNTERPARTS, EFFECTIVENESS. This Agreement may be
executed in two or more counterparts. Each counterpart is deemed an original,
but all such counterparts taken together constitute one and the same instrument.
This Agreement becomes effective upon the execution hereof by Debtor and
delivery of the same to Secured Party, and it is not necessary for Secured Party
to execute any acceptance hereof or otherwise signify or express its acceptance
hereof.
Section 7.10 LOCKBOX. Notwithstanding anything contained herein to the
contrary, Debtor shall cause the accounts referenced in the Deposit and
Disbursement Agreement of even date herewith between Secured Party, Xxxx
Petroleum Corporation, and Debtor (the "DEPOSIT AND DISBURSEMENT AGREEMENT") to
be deposited in the lockbox account set forth in the Deposit and Disbursement
Agreement. All such accounts referenced in the Deposit and Disbursement
Agreement and the funds deposited in the lockbox account thereunder shall be
disbursed as provided therein. As to all other accounts referenced herein which
are not subject to the Deposit and Disbursement Agreement, Debtor may use such
accounts and the proceeds thereof in its ordinary course of business until such
time as an Event of Default occurs.
SIGNATURE PAGE TO SECURITY AGREEMENT
DATED SEPTEMBER 12, 1997, EXECUTED FOR
THE BENEFIT OF BANK ONE, TEXAS,
NATIONAL ASSOCIATION
DEBTOR: WESTERN PACIFIC AIRLINES, INC.
By: /s/Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Vice President/CFO
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