Continuing Security Agreement
Name
of Debtor: Advanced
Materials, Inc.
Taxpayer
I.D. No.: 000000000
State
Organization No.: 0000000000
Debtor's
Address: 0000
Xxx Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000
Dated
as
of March 1, 2007
Grant
of Security Interest. Advanced
Materials, Inc. (whether one or more, the "Debtor", individually and
collectively if more than one) grants to JPMorgan Chase Bank, N.A., whose
address is 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000 (together with its successors
and
assigns, the "Bank") a continuing security interest in, pledges and assigns
to
the Bank all of the "Collateral" (as hereinafter defined) owned by the Debtor,
all of the collateral in which the Debtor has rights or power to transfer rights
and all Collateral in which the Debtor later acquires ownership, other rights
or
rights or power to transfer rights to secure the payment and performance of
the
Liabilities.
Borrower.
"Borrower" means each and all of Advanced Materials, Inc.
Liabilities.
"Liabilities" means all obligations, indebtedness and liabilities
of the Borrower whether individual, joint and several,
absolute or contingent, direct or indirect, liquidated or unliquidated, now
or
hereafter existing in favor of the
Bank,
including without limitation, all liabilities, all interest, costs and fees
arising under or from any note, open account, overdraft, letter of credit
application, endorsement, surety agreement, guaranty, credit card, lease, Rate
Management Transaction, acceptance, foreign exchange contract or depository
service contract, whether payable to the Bank or to a third party and
subsequently acquired by the Bank, any monetary obligations (including interest)
incurred or accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceedings, regardless of whether allowed or
allowable in such proceeding, and all renewals, extensions, modifications,
consolidations, rearrangements, restatements, replacements or substitutions
of
any of the foregoing. "Rate
Management Transaction" means any transaction (including an agreement with
respect thereto) that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option, derivative transaction or any other similar transaction (including
any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures. The Debtor and the Bank
specifically contemplate that Liabilities include indebtedness hereafter
incurred by the Borrower to the Bank.
Collateral.
Accounts; Chattel Paper; Deposit Accounts and other payment obligations of
a
financial institution (including the Bank); Documents; Equipment; General
Intangibles; Instruments; Inventory; Investment Property; and Letter of Credit
Rights.
Description
of Collateral.
As used
in this agreement, the term "Collateral" means all of the Debtor's property
whether owned individually or jointly with others of the types indicated above
and defined below, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located, including but not limited to any
items listed on any schedule or list attached hereto. In addition, the term
"Collateral" includes all "proceeds," "products" and "supporting obligations"
(as such terms are defined in the "UCC," meaning the Uniform Commercial Code
of
Texas, as in effect from time to time) of the Collateral indicated above,
including but not limited to all stock rights, subscription rights, dividends,
stock dividends, stock splits, or liquidating dividends, and all cash, accounts,
chattel paper, "instruments," "investment property," "financial assets," and
"general intangibles" (as such terms are defined in the UCC) arising from the
sale, rent, lease, casualty loss or other disposition of the Collateral, and
any
Collateral returned to, repossessed by or stopped in transit by the Debtor,
and
all insurance claims relating to any of the Collateral (defined above). The
term
"Collateral" further includes all of the Debtor's right, title and interest
in
and to all books, records and data relating to the Collateral identified above,
regardless of the form of media containing such information or data, and all
software necessary or desirable to use any of the Collateral identified above
or
to access, retrieve, or process any of such information or data. Where the
Collateral is in the possession of the Bank or the Bank's agent, the Debtor
agrees to deliver to the Bank any property that represents an increase in the
Collateral or profits or proceeds of the Collateral.
1. |
"Accounts"
means all of the Debtor's "accounts" as defined in Article 9 of the
UCC.
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2. |
"Chattel
Paper" means all of the Debtor's "chattel paper" as defined in Article
9
of the UCC.
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3. |
"Deposit
Accounts" means all of the Debtor's "deposit accounts" as defined
in
Article 9 of the UCC and other payment obligations of a financial
institution (including the Bank) to the
Debtor.
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4. |
"Documents"
means all of the Debtor's "documents" as defined in Article 9 of
the
UCC.
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"Equipment"
means all of the Debtor's "equipment" as defined in Article 9 of the UCC. In
addition, "Equipment" includes any "documents" (as defined in Article 9 of
the
UCC) issued with respect to any of the Debtor's "equipment" (as defined in
Article 9 of the UCC) and certificates of title relating to the foregoing.
Without limiting the security interest granted, the Debtor represents and
warrants that the Debtor's Equipment is presently located at 0000
Xxx
Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000.
5. |
"General
Intangibles" means all of the Debtor's "general intangibles" as defined
in
Article 9 of the UCC. In addition, "General Intangibles" further
includes
any right to a refund of taxes paid at any time to any governmental
entity.
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6. |
"Instruments"
means all of the Debtor's "instruments" as defined in Article 9 of
the
UCC.
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"Inventory"
means all of the Debtor's "inventory" as defined in Article 9 of the UCC. In
addition, "Inventory" includes any "documents" and certificates of title issued
with respect to any of the Debtor's "inventory" (as defined in Article 9 of
the
UCC). Without limiting the security interest granted, the Debtor represents
and
warrants that the Debtor's Inventory is presently located at 0000
Xxx
Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000.
7. |
"Investment
Property" means all of the Debtor's "investment property" as defined
in
Article 9 of the UCC and all of the Debtor's "financial assets,"
as
defined in Article 8 of the UCC.
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8. |
"Letter
of Credit Rights" means all of the Debtor's "letter of credit rights"
as
defined in Article 9 of the UCC.
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Representations,
Warranties and Covenants. The
Debtor represents and warrants to, and covenants and agrees with the Bank that
each of the following is true and will remain true until termination of this
agreement and full and final payment of all Liabilities:
1. |
Its
principal residence or chief executive office is at the address shown
above;
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2. |
The
Debtor's name as it appears in this agreement is its exact name as
it
appears in the Debtor's organizational documents, as amended, including
any trust documents;
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3. |
It
is or will become the owner of the Collateral free from any liens,
encumbrances or security interests, except for this security interest
and
existing liens disclosed to and accepted by the Bank in writing,
and it
will defend the Collateral against all claims and demands of all
persons
at any time claiming any interest in the
Collateral;
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4. |
It
will keep the Collateral free of liens, encumbrances and other security
interests, except for this security interest, maintain the Collateral
in
good repair, not use it illegally and exhibit the Collateral to the
Bank
on demand;
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5. |
At
its own expense, the Debtor will maintain comprehensive casualty
insurance
on the Collateral against such risks, in such amounts, with such
deductibles and with such companies as may be satisfactory to the
Bank.
Each insurance policy shall contain a lender's loss payable endorsement
in
form and substance satisfactory to the Bank and a prohibition against
cancellation or amendment of the policy or removal of the Bank as
loss
payee without at least thirty (30) days'
prior written notice to the Bank. In all events, the amounts of such
insurance coverages shall conform to prudent business practices and
shall
be in such minimum amounts that the Debtor will not be deemed a
co-insurer. The policies and certificates evidencing them, shall,
if the
Bank so requests, be deposited with the Bank. The Debtor authorizes
the
Bank to endorse on the Debtor's behalf and to negotiate drafts reflecting
proceeds of insurance of the Collateral, provided that the Bank shall
remit to the Debtor such surplus, if any, as remains after the proceeds
have been applied, at the Bank's option, to the satisfaction of all
of the
Liabilities (in such order of application as the Bank may elect)
or to the
establishment of a cash collateral account for the
Liabilities;
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6. |
It
will not sell, lease, license or offer to sell, lease, license or
otherwise transfer the Collateral or any rights in or to the Collateral,
without the written consent of the Bank, except in the ordinary course
of
business;
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7. |
It
will not change the location of the Collateral from the locations
of the
Collateral described in this agreement, without providing at least
ten
(10) days'
prior written notice to the Bank;
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8. |
It
will pay promptly when due all taxes and assessments upon the Collateral,
or for the use or operation of the
Collateral;
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9. |
No
financing statement covering all or any part of the Collateral or
any
proceeds is on file in any public office, unless the Bank has approved
that filing. From time to time at the Bank's request, the Debtor
will
execute one or more financing statements or similar record and a
control
agreement with respect to the proceeds in form satisfactory to the
Bank
and will pay the cost of filing them in all public offices where
filing is
deemed by the Bank to be necessary or desirable. In addition, the
Debtor
shall execute and deliver, or cause to be executed and delivered,
such
other documents as the Bank may from time to time request to perfect
or to
further evidence the security interest created in the Collateral
by this
agreement including, without limitation: (a) any certificate or
certificates of title to the Collateral with the security interest
of the
Bank noted thereon or executed applications for such certificates
of title
in form satisfactory to the Bank; (b) any assignments of claims under
government contracts which are included as part of the Collateral,
together with any notices and related documents as the Bank may from
time
to time request; (c) any assignment of any specific account receivable
as
the Bank may from time to time request; (d) a notice of and acknowledgment
of the Bank's security interest and a control agreement with respect
to
any Collateral, all in form and substance satisfactory to the Bank;
(e) a
notice to and acknowledgment from any person holding or in possession
of
any Collateral that such persons holds the Collateral as a bailee
for the
Bank's benefit, all in form and substance satisfactory to the Bank;
and
(f) any consent to the assignment of proceeds of any letter of credit,
all
in form and substance satisfactory to the Bank;
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10. |
It
will not, without the Bank's prior written consent, change the Debtor's
name, the Debtor's business organization, the jurisdiction under
which the
Debtor's business organization is formed or organized, or the Debtor's
chief executive office, or of any additional places of the Debtor's
business;
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11. |
It
will provide any information that the Bank may reasonably request
and will
permit the Bank or the Bank's agents to inspect and copy its books,
records, data and the Collateral at any time during normal business
hours;
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12. |
The
Bank shall have the right now, and at any time in the future in its
sole
and absolute discretion, without notice to the Debtor, to (a) prepare,
file and sign the Debtor's name on any proof of claim in bankruptcy
or
similar document against any owner of the Collateral and (b) prepare,
file
and sign the Debtor's name on any financing statement, notice of
lien,
assignment or satisfaction of lien or similar document in connection
with
the Collateral. The Debtor hereby authorizes the Bank to file financing
statements covering Collateral or such lesser amount of assets as
the Bank
may determine, or the Bank may, at its option, file financing statements
or similar records containing any collateral description which reasonably
describes the Collateral in which a security interest is granted
under
this agreement;
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13. |
Immediately
upon the Debtor's receipt of any Collateral evidenced by an agreement,
"instrument," "chattel paper," certificated "security" or "document"
(as
such terms are defined in the UCC) (collectively, "Special Collateral"),
the Debtor shall xxxx the Special Collateral to show that it is subject
to
the Bank's security interest and shall deliver the original to the
Bank
together with appropriate endorsements and other specific evidence
of
assignment or transfer in form and substance satisfactory to the
Bank;
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14. |
The
Debtor shall keep all tangible Collateral in good order and repair
and
shall not waste or destroy any of the Collateral, nor use any of
the
Collateral in violation of any applicable law or any policy of insurance
thereon. To the extent that the Collateral consists of "farm products"
(as
defined in the UCC), the Debtor shall attend to and care for the
crops and
livestock in accordance with the best practices of good husbandry,
and do,
or cause to be done, any and all acts that may at any time be appropriate
or necessary to grow, raise, harvest, care for, preserve and protect
the
farm products;
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15. |
Except
as may be otherwise disclosed in writing by the Debtor to the Bank,
none
of the Collateral is attached to real estate so as to constitute
a
"fixture" (as defined in the UCC) and none of the Collateral shall
at any
time hereafter be attached to real estate so as to constitute a fixture.
If any of the Collateral is now or at any time hereafter becomes
so
attached to real estate so as to constitute a fixture, the Debtor
shall,
at any time upon the Bank's request, furnish the Bank with a disclaimer
of
interest in the Collateral executed by each person or entity having
an
interest in such real estate.
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Accounts;
Chattel Paper; General Intangibles and Instruments. If
the
Collateral includes the Debtor's "Accounts, Chattel Paper, General Intangibles
and Instruments" and until the Bank gives notice to the Debtor to the contrary,
the Debtor will, in the usual course of its business and at its own expense,
on
the Bank's behalf but not as the Bank's agent, demand and receive and use its
best efforts to collect all moneys due or to become due with respect to the
Collateral. Until the Bank gives notice to the Debtor to the contrary or until
the Debtor is in default, it may use the funds collected in its business. Upon
notice from the Bank or upon default, the Debtor agrees that all sums of money
it receives on account of or in payment or settlement of the Accounts, Chattel
Paper, General Intangibles and Instruments shall be held by it as trustee for
the Bank without commingling with any of the Debtor's other funds, and shall
immediately be delivered to the Bank with endorsement to the Bank's order of
any
check or similar instrument. It is agreed that, at any time the Bank so elects,
the Bank shall be entitled, in its own name or in the name of the Debtor or
otherwise, but at the expense and cost of the Debtor, to collect, demand,
receive, xxx for or compromise any and all Accounts, Chattel Paper, General
Intangibles, and Instruments, and to give good and sufficient releases, to
endorse any checks, drafts or other orders for the payment of money payable
to
the Debtor and, in the Bank's discretion, to file any claims or take any action
or proceeding which the Bank may deem necessary or advisable. It is expressly
understood and agreed, however, that the Bank shall not be required or obligated
in any manner to make any demand or to make any inquiry as to the nature or
sufficiency of any payment received by it or to present or file any claim or
take any other action to collect or enforce the payment of any amounts which
may
have been assigned to the Bank or to which the Bank may be entitled at any
time
or times. All notices required in this paragraph will be immediately effective
when sent. Such notices need not be given prior to the Bank's taking action.
The
Debtor appoints the Bank or the Bank's designee as the Debtor's attorney-in-fact
to do all things with reference to the Collateral as provided for in this
section including without limitation (1) to notify the post office authorities
to change the Debtor's mailing address to one designated by the Bank, (2) to
receive, open and dispose of mail addressed to the Debtor, (3) to sign the
Debtor's name on any invoice or xxxx of lading relating to any Collateral,
on
assignments and verifications of account and on notices to the Debtor's
customers, and (4) to do all things necessary to carry out this agreement or
to
perform any of the obligations of the Debtor under this agreement. The Debtor
ratifies and approves all acts of the Bank as attorney-in-fact. The Bank shall
not be liable for any act or omission, nor any error of judgment or mistake
of
fact or law, but only for its gross negligence or willful misconduct. This
power
being coupled with an interest is irrevocable until all of the Liabilities
have
been fully satisfied and shall survive the death or disability of the
Debtor.
Pledge.
If the
Debtor is not liable for all or any part of the Liabilities, then the Debtor
agrees that:
1. |
If
any moneys become available from any source other than the Collateral
that
the Bank can apply to the Liabilities, the Bank may apply them in
any
manner it chooses, including but not limited to applying them against
obligations, indebtedness or liabilities which are not secured by
this
agreement.
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2. |
The
Bank may take any action against the Borrower, the Collateral or
any other
collateral for the Liabilities, or any other person or entity liable
for
any of the Liabilities.
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3. |
The
Bank may release the Borrower or anyone else from the Liabilities,
either
in whole or in part, or release the Collateral in whole or in part
or any
other collateral for the Liabilities, and need not perfect a security
interest in the Collateral or any other collateral for the
Liabilities.
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4. |
The
Bank does not have to exercise any rights that it has against the
Borrower
or anyone else, or make any effort to realize on the Collateral or
any
other collateral for the Liabilities, or exercise any right of
setoff.
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5. |
Without
notice or demand and without affecting the Debtor's obligations hereunder,
from time to time, the Bank is authorized to: (a) renew, modify,
compromise, rearrange, restate, consolidate, extend, accelerate or
otherwise change the time for payment of, or otherwise change the
terms of
the Liabilities or any part thereof, including increasing or decreasing
the rate of interest thereon; (b) release, substitute or add any
one or
more sureties, endorsers, or guarantors; (c) take and hold other
collateral for the payment of the Liabilities, and enforce, exchange,
substitute, subordinate, impair, waive or release any such collateral;
(d)
proceed against the Collateral or any other collateral for the Liabilities
and direct the order or manner of sale as the Bank in its discretion
may
determine; and (e) apply any and all payments received by the Bank
in
connection with the Liabilities, or recoveries from the Collateral
or any
other collateral for the Liabilities, in such order or manner as
the Bank
in its discretion may determine.
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6. |
The
Debtor's obligations hereunder shall not be released, diminished
or
affected by (a) any act or omission of the Bank, (b) the voluntary
or
involuntary liquidation, sale or other disposition of all or substantially
all of the assets of the Borrower, or any receivership, insolvency,
bankruptcy, reorganization, or other similar proceedings affecting
the
Borrower or any of its assets or any other obligor on the Liabilities
or
that obligor's assets, (c) any change in the composition or structure
of
the Borrower or any other obligor on the Liabilities, including a
merger
or consolidation with any other person or entity, or (d) any payments
made
upon the Liabilities.
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7. |
The
Debtor expressly consents to any impairment of any other collateral
for
the Liabilities, including, but not limited to, failure to perfect
a
security interest and release of any other collateral for the Liabilities
and any such impairment or release shall not affect the Debtor's
obligations hereunder.
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8. |
The
Debtor waives and agrees not to enforce any rights of subrogation,
contribution or indemnification that it may have against the Borrower,
any
person or entity liable on the Liabilities, or the Collateral, until
the
Borrower and the Debtor have fully performed all their obligations
to the
Bank, even if those obligations are not covered by this
agreement.
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9. |
The
Debtor waives (a) to the extent not prohibited by applicable law,
all
rights and benefits under any laws or statutes regarding sureties,
as may
be amended, (b) any right the Debtor may have to receive notice of
the
following matters before the Bank enforces any of its rights: (i)
the
Bank's acceptance of this agreement, (ii) incurrence or acquisition
of any
Liabilities, any credit that the Bank extends to the Borrower, (iii)
the
Borrower's default, (iv) any demand, intent to accelerate, diligence,
presentment, dishonor and protest, or (v) any action that the Bank
takes
regarding the Borrower, anyone else, any other collateral for the
Liabilities, or any of the Liabilities, which it might be entitled
to by
law or under any other agreement, (c) any right it may have to require
the
Bank to proceed against the Borrower, any guarantor or other obligor
on
the Liabilities, the Collateral or any other collateral for the
Liabilities, or pursue any remedy in the Bank's power to pursue,
(d) any
defense based on any claim that the Debtor's obligations exceed or
are
more burdensome than those of the Borrower, (e) the benefit of any
statute
of limitations affecting the Debtor's obligations hereunder or the
enforcement hereof, (f) any defense arising by reason of any disability
or
other defense of the Borrower or by reason of the cessation from
any cause
whatsoever (other than payment in full) of the obligation of the
Borrower
for the Liabilities, and (g) any defense based on or arising out
of any
defense that the Borrower may have to the payment or performance
of the
Liabilities or any portion thereof. The Bank may waive or delay enforcing
any of its rights without losing them. Any waiver affects only the
specific terms and time period stated in the
waiver.
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10. |
The
Debtor agrees that to the extent any payment or transfer is received
by
the Bank in connection with the Liabilities, and all or any part
of such
payment or transfer is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be transferred or repaid
by the
Bank or paid over to a trustee, receiver or any other person or entity,
whether under any bankruptcy act or otherwise (any of those payments
or
transfers is hereinafter referred to as a "Preferential Payment"),
then
this agreement shall continue to be effective or shall be reinstated,
as
the case may be, even if all Liabilities have been paid in full,
and
whether or not the Bank is in possession of this agreement or whether
this
agreement has been marked paid, cancelled, released or returned to
the
Debtor, and, to the extent of the payment or repayment or other transfer
by the Bank, the Liabilities or part intended to be satisfied by
the
Preferential Payment shall be revived and continued in full force
and
effect as if the Preferential Payment had not been made. If this
agreement
must be reinstated, the Debtor agrees to execute and deliver to the
Bank
any new security agreements and financing statements, if necessary
or if
requested by the Bank, in form and substance acceptable to the Bank,
covering the Collateral.
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11. |
The
Debtor agrees
to fully cooperate with the Bank and not to delay, impede or otherwise
interfere with the efforts of the Bank to secure payment from the
assets
which secure the Liabilities including actions, proceedings, motions,
orders, agreements or other matters relating to relief from automatic
stay, abandonment of property, use of cash collateral and sale of
the
Bank's collateral free and clear of all
liens.
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12. |
The
Debtor
has (a)
without reliance on the Bank or any information received from the
Debtor
and based upon the records and information the Debtor deems appropriate,
made an independent investigation of the Borrower, the Borrower's
business, assets, operations, prospects and condition, financial
or
otherwise, and any circumstances that may bear upon those transactions,
the Borrower or the obligations, liabilities and risks undertaken
pursuant
to this agreement; (b) adequate means to obtain from the Borrower
on a
continuing basis information concerning the Borrower and the Bank
has no
duty to provide any information concerning the Borrower or other
obligor
on the Liabilities to the Debtor; (c) full and complete access to
the
Borrower and any and all records relating to any Liabilities now
or in the
future owing by the Borrower; (d) not relied and will not rely upon
any
representations or warranties of the Debtor not embodied in this
agreement
or any acts taken by the Debtor prior to or after the execution or
other
authentication and delivery of this agreement (including but not
limited
to any review by the Debtor of the business, assets, operations,
prospects
and condition, financial or otherwise, of the Borrower); and (e)
determined that the Debtor will receive benefit, directly or indirectly,
and has or will receive fair and reasonably equivalent value, for
the
execution and delivery of this agreement and the rights provided
to the
Bank. By entering into this agreement, the Debtor does not intend:
(i) to
incur or believe that the Debtor will incur debts that would be beyond
the
Debtor's ability to pay as those debts mature; or (ii) to hinder,
delay or
defraud any creditor of the Debtor. The Debtor is neither engaged
in nor
about to engage in any business or transaction for which the remaining
assets of the Debtor are unreasonably small in relation to the business
or
transaction, and any property remaining with the Debtor after the
execution or other authentication of this agreement is not unreasonably
small capital.
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13. |
Without
limiting any foregoing waiver, consent or agreement, the Debtor further
waives all rights, if any, of the Debtor under Rule 31, Texas Rules
of
Civil Procedure, or Chapter 34 of the Texas Business and Commerce
Code, or
Section 17.001 of the Texas Civil Practice and Remedies Code; and
(i) to
the extent the Debtor is subject to the Texas Revised Partnership
Act
("TRPA") or Section 152.306 of the Texas Business Organizations Code
("BOC"), compliance by the Debtor with Section 3.05(d) of TRPA and
Section
152.306(b) of BOC.
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Default;
Remedies.
If any
of the Liabilities are not paid at maturity, whether by acceleration or
otherwise, or if a default by anyone occurs under the terms of any agreement
related to any of the Liabilities, then the Bank shall have the rights and
remedies provided by law or this agreement, including but not limited to the
right to require the Debtor to assemble the Collateral and make it available
to
the Bank at a place to be designated by the Bank which is reasonably convenient
to both parties, the right to take possession of the Collateral with or without
demand and with or without process of law, and the right to sell and dispose
of
it and distribute the proceeds according to law. Should a default occur, the
Debtor will pay to the Bank all costs reasonably incurred by the Bank for the
purpose of enforcing its rights hereunder, to the extent not prohibited by
law,
including, without limitation: costs of foreclosure; costs of obtaining money
damages; and a reasonable fee for the services of internal and outside attorneys
employed or engaged by the Bank or its affiliates for any purpose related to
this agreement, including, without limitation, consultation, drafting documents,
sending notices or instituting, prosecuting or defending litigation or any
proceeding. The Debtor agrees that upon default the Bank may dispose of any
of
the Collateral in its then present condition, that the Bank has no duty to
repair or clean the Collateral prior to sale, and that the disposal of the
Collateral in its present condition or without repair or clean-up shall not
affect the commercial reasonableness of such sale or disposition. The Bank's
compliance with any applicable state or federal law requirements in connection
with the disposition of the Collateral will not adversely affect the commercial
reasonableness of any sale of the Collateral. The Bank may disclaim warranties
of title, possession, quiet enjoyment, and the like, and the Debtor agrees
that
any such action shall not affect the commercial reasonableness of the sale.
In
connection with the right of the Bank to take possession of the Collateral,
the
Bank may take possession of any other items of property in or on the Collateral
at the time of taking possession, and hold them for the Debtor without liability
on the part of the Bank. The Debtor expressly agrees that the Bank may enter
upon the premises where the Collateral is believed to be located without any
obligation of payment to the Debtor, and that the Bank may, without cost, use
any and all of the Debtor's "equipment" (as defined in the UCC) in the
manufacturing or processing of any "inventory" (as defined in the UCC) or in
growing, raising, cultivating, caring for, harvesting, loading and transporting
of any of the Collateral that constitutes "farm products" (as defined in the
UCC). If there is any statutory requirement for notice, that requirement shall
be met if the Bank sends notice to the Debtor at least ten (10) days prior
to
the date of sale, disposition or other event giving rise to the required notice,
and such notice shall be deemed commercially reasonable. The Debtor is liable
for any deficiency remaining after disposition of the Collateral.
Miscellaneous.
1. |
Where
the Collateral is located at, used in or attached to a facility leased
by
the Debtor, the Debtor will obtain from the lessor a consent to the
granting of this security interest and a release or subordination
of the
lessor's interest in any of the Collateral, in form and substance
satisfactory to the Bank.
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2. |
At
its option the Bank may, but shall be under no duty or obligation
to,
discharge taxes, liens, security interests or other encumbrances
at any
time levied or placed on the Collateral, pay for insurance on the
Collateral, and pay for the maintenance and preservation of the
Collateral, and the Debtor agrees to reimburse the Bank on demand
for any
payment made or expense incurred by the Bank, with interest at the
highest
rate at which interest may accrue under any of the instruments or
documents evidencing the
Liabilities.
|
3. |
No
delay on the part of the Bank in the exercise of any right or remedy
waives that right or remedy, no single or partial exercise by the
Bank of
any right or remedy precludes any other exercise of it or the exercise
of
any other right or remedy, and no waiver or indulgence by the Bank
of any
default is effective unless it is in writing and signed by the Bank,
nor
does a waiver on one occasion waive that right on any future
occasion.
|
4. |
If
any provision of this agreement is invalid, it shall be ineffective
only
to the extent of its invalidity, and the remaining provisions shall
be
valid and effective.
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5. |
Except
as provided in the Accounts; Chattel Paper; General Intangibles;
and
Instruments paragraph above, any notices and demands under or related
to
this document shall be in writing and delivered to the intended party
at
its address stated herein, and if to the Bank, at its main office
if no
other address of the Bank is specified herein, by one of the following
means: (a) by hand, (b) by a nationally recognized overnight courier
service, or (c) by certified mail, postage prepaid, with return receipt
requested. Notice shall be deemed given: (a) upon receipt if delivered
by
hand, (b) on the Delivery Day after the day of deposit with a nationally
recognized courier service, or (c) on the third Delivery Day after
the
notice is deposited in the mail. "Delivery Day" means a day other
than a
Saturday, a Sunday, or any other day on which national banking
associations are authorized to be closed. Any party may change its
address
for purposes of the receipt of notices and demands by giving notice
of
such change in the manner provided in this
provision.
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6. |
All
rights of the Bank benefit the Bank's successors and assigns; and
all
obligations of the Debtor bind the Debtor's heirs, executors,
administrators, successors and assigns. If more than one person or
entity
signs as the Debtor, their obligations are joint and several and
each
agreement, representation, warranty and covenant shall be individual,
joint and several and the "Collateral" includes any property that
is owned
by any Debtor individually or jointly with any
other.
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7. |
A
carbon, photographic or other reproduction of this agreement is sufficient
as, and can be filed as, a financing statement. The Bank is irrevocably
appointed the Debtor's attorney-in-fact to execute any financing
statement
on the Debtor's behalf covering the Collateral. The Debtor authorizes
the
Bank to file one or more financing statements or similar records
related
to the security interests created by this agreement, and further
authorizes the Bank, as secured party herein, instead of the Debtor,
to
sign such financing statements and other similar
records.
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Indemnification. The
Debtor agrees to indemnify, defend and hold the Bank, its parent companies,
subsidiaries, affiliates, their respective successors and assigns and each
of
their respective shareholders, directors, officers, employees and agents
(collectively the "Indemnified Persons") harmless from and against any and
all
loss, liability, obligation, damage, penalty, judgment, claim, deficiency,
expense, interest, penalties, attorneys’ fees (including the fees and expenses
of attorneys engaged by the Indemnified Person at the Indemnified Person’s
reasonable discretion) and amounts paid in settlement ("Claims") to which any
Indemnified Person may become subject arising out of or relating to this
agreement or the Collateral, including
any Claims resulting from any Indemnified Person’s own
negligence,
except
to the limited extent that the Claims are proximately caused by the Indemnified
Person’s gross
negligence or willful misconduct.
The
indemnification provided for in this paragraph shall survive the termination
of
this agreement and shall not be affected by the presence, absence or amount
of
or the payment or nonpayment of any claim under, any insurance.
Governing
Law and Venue.
This
agreement shall be governed by and construed in accordance with the laws of
the
State of Texas (without giving effect to its laws of conflicts), and to the
extent applicable, federal law, except to the extent that the laws regarding
the
perfection and priority of security interests of the state(s) in which either
the Debtor or any property securing the Liabilities is located, are applicable.
The Debtor agrees that any legal action or proceeding with respect to any of
its
obligations under this agreement may be brought by the Bank in any state or
federal court located in the State of Texas, as the Bank in its sole discretion
may elect. By the execution and delivery of this agreement, the Debtor submits
to and accepts, for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of those courts. The Debtor
waives any claim that the State of Texas is not a convenient forum or the proper
venue for any such suit, action or proceeding.
Additional
Representations, Warranties and Covenants. The
Debtor represents, warrants and covenants to the Bank that each of the following
is true and will remain true until termination of this agreement and payment
in
full of all Liabilities: (a) the execution and delivery of this agreement and
the performance of the obligations it imposes do not violate any law, do not
conflict with any agreement by which it is bound, and do not require the consent
or approval of any governmental authority or any third party; (b) this agreement
is a valid and binding agreement, enforceable according to its terms; and (c)
all balance sheets, profit and loss statements, and other financial statements
furnished to the Bank in connection with the Liabilities are accurate and fairly
reflect the financial condition of the organizations and persons to which they
apply on their effective dates, including contingent liabilities of every type,
which financial condition has not changed materially and adversely since those
dates. The Debtor, other than a natural person, further represents that: (a)
it
is duly organized, validly existing and in good standing under the laws of
the
state where it is organized and in good standing in each state where it is
doing
business; and (b) the execution and delivery of this agreement and the
performance of the obligations it imposes (i) are within its powers and have
been duly authorized by all necessary action of its governing body; and (ii)
do
not contravene the terms of its articles of incorporation or organization,
its
by-laws, or any agreement or document governing its affairs.
WAIVER
OF SPECIAL DAMAGES.
THE
DEBTOR WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE
UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE BANK IN ANY LEGAL ACTION
OR
PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
JURY
WAIVER.
THE
DEBTOR AND THE BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN
RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN
OR
AMONG THE DEBTOR AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE
FINANCING DESCRIBED HEREIN.
THIS
AGREEMENT REPRESENTS THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Debtor:
|
Advanced
Materials, Inc.
|
||||||
By:
/s/ Xxxxxxx X Xxxxxxxxx
|
||||||
Xxxxxxx
X
Xxxxxxxxx
President and CFO
|
||||||
Printed Name Title | ||||||
Date
Signed: February 26, 2007
|
The
Bank
is executing this agreement for the purpose of acknowledging and agreeing to
the
foregoing Jury Waiver, the notice given under §26.02 of the Texas Business and
Commerce Code and to comply with the waiver requirements of TRPA and BOC, and
the Bank's failure to execute or authenticate this agreement will not invalidate
this agreement.
Bank:
|
JPMorgan
Chase Bank, N.A.
|
||||||
By:
/s/ Xxxxx X Xxxxxxxxxx
|
||||||
Xxxxx
X Xxxxxxxxxx SVP
|
||||||
Printed Name Title | ||||||
Date
Signed: March 1, 2007
|