PLEDGE AND SECURITY AGREEMENT (QUEST ENERGY SERVICE, LLC)
Exhibit 10.8
(QUEST ENERGY SERVICE, LLC)
THIS PLEDGE AND SECURITY AGREEMENT (herein referred to as this “Security
Agreement”) is executed as of November 15, 2007, by QUEST ENERGY SERVICE, LLC, a
Kansas limited liability company (“Debtor”), whose address is 000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, for the benefit of ROYAL BANK OF
CANADA (in its capacity as “Administrative Agent” and “Collateral Agent” for the
Secured Parties, as such term is defined in the Credit Agreement (hereafter
defined)), as “Secured Party,” whose address is Xxxxx Xxxx Xxxxx, X.X. Xxx 00,
200 Bay Street, 00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated of even date
herewith (as the same may hereafter be amended, supplemented and restated, the
“Credit Agreement”), among QUEST RESOURCE CORPORATION a Nevada corporation (the
“Borrower”), the various financial institutions that are, or may from time to
time become, parties thereto (individually a “Lender” and collectively the
“Lenders”) and Royal Bank of Canada, as administrative agent (in such capacity,
the “Administrative Agent”) and as collateral agent (in such capacity, the
“Collateral Agent”), the Lenders have agreed to make Loans for the account of
the Borrower;
WHEREAS, Debtor has agreed to guarantee the obligations of the Borrower
under the Credit Agreement and to secure its guaranteed obligations by the
pledge of its assets hereunder;
WHEREAS, Debtor has duly authorized the execution, delivery and performance
of this Security Agreement;
WHEREAS, it is in the best interests of Debtor to execute a Guaranty of the
Obligations as herein defined and this Security Agreement inasmuch as Debtor
will derive substantial direct and indirect benefits from the Credit Extensions
made from time to time to the Borrower by the Lenders pursuant to the Credit
Agreement;
WHEREAS, this Security Agreement is integral to the transactions
contemplated by the Loan Documents, and the execution and delivery of this
Security Agreement is a condition precedent to the Lenders’ obligations to
extend credit under the Loan Documents; and
ACCORDINGLY, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Debtor and Secured Party hereby agree as follows:
1. REFERENCE TO CREDIT AGREEMENT. The terms, conditions, and provisions of the
Credit Agreement are incorporated herein by reference, the same as if set forth
herein verbatim, which terms, conditions, and provisions shall continue to be in
full force and effect hereunder so long as the Lenders are obligated to lend under
the Credit Agreement and thereafter until the Obligations are paid and performed in
full (except as provided in Sections 10.01(d) and 10.01(e) of the Credit Agreement).
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2. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context hereof
otherwise requires, each term defined in the Credit Agreement or in the UCC is used
in this Security Agreement with the same meaning; provided that, if the definition
given to such term in the Credit Agreement conflicts with the definition given to
such term in the UCC, the definition in the Credit Agreement shall control to the
extent legally allowable; and if any definition given to such term in Chapter 9 of
the UCC conflicts with the definition given to such term in any other chapter of the
UCC, the Chapter 9 definition shall prevail. As used herein, the following terms
have the meanings indicated:
Borrower has the meaning set forth in the first recital.
Collateral has the meaning set forth in Paragraph 4 hereof.
Collateral Note Security has the meaning set forth in
Paragraph 4 hereof.
Collateral Notes has the meaning set
forth in Paragraph 4 hereof.
Control Agreement means, with respect to any Collateral consisting of
investment property, Deposit Accounts, electronic chattel paper, and
letter-of-credit rights, an agreement evidencing that Secured Party has
“control” (as defined in the UCC) of such Collateral.
Copyrights has the meaning set forth in Paragraph 4 hereof.
Credit Agreement has the meaning set forth in the first
recital.
Deposit Accounts has the meaning set forth in
Paragraph 4 hereof.
Intellectual Property has the meaning
set forth in Paragraph 4 hereof.
Lender means, individually, or Lenders means, collectively, on any
date of determination, the Administrative Agent and Lenders, and their
permitted successors and assigns.
Material Agreements has the meaning set forth in Paragraph 4 hereof.
Obligations means, collectively, (a) the Obligations as such term is
defined in the Credit Agreement, and (b) all indebtedness, liabilities,
and obligations of Debtor arising under this Security Agreement or any
Guaranty assuring payment of all or any part of the Obligations; it being
the intention and contemplation of Debtor and Secured Party that future
advances will be made by one or more Lenders to Debtor for a variety of
purposes.
Obligor means any Person obligated with respect to any of the
Collateral, whether as an account debtor, obligor on an instrument, issuer
of securities, or otherwise.
Partnerships/Limited Liability Companies shall mean: (a) those
partnerships and limited liability companies listed on Annex B-1 attached
hereto and incorporated herein by reference, as such partnerships or
limited liability companies exist or may hereinafter be restated, amended,
or
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restructured; (b) any partnership, joint venture, or limited liability
company in which Debtor shall, at any time, become a limited or general
partner, venturer, or member; or (c) any partnership, joint venture, or
corporation formed as a result of the restructure, reorganization, or
amendment of the Partnerships/Limited Liability Companies.
Partnership/Limited Liability Company Agreements shall mean: (a)
those agreements listed on Annex B-1 attached hereto and incorporated
herein by reference (together with any modifications, amendments, or
restatements thereof); and (b) partnership agreements, joint venture
agreements, or organizational agreements for any of the partnerships,
joint ventures, or limited liability companies described in clause (b) of
the definition of “Partnerships/Limited Liability Companies” above
(together with any modifications, amendments or restatements thereof), and
“Partnership/Limited Liability Company Agreement” means any one of the
Partnership/Limited Liability Company Agreements.
Partnership/Limited Liability Company Interests shall mean all of
Debtor’s Rights, title and interest now or hereafter accruing under the
Partnership/Limited Liability Company Agreements with respect to all
distributions, allocations, proceeds, fees, preferences, payments, or
other benefits, which Debtor now is or may hereafter become entitled to
receive with respect to such interests in the Partnerships/Limited
Liability Companies and with respect to the repayment of all loans now or
hereafter made by Debtor to the Partnerships/Limited Liability Companies.
Patents has the meaning set forth in Paragraph 4 hereof.
Pledged Securities means, collectively, the Pledged Shares and any
other Collateral constituting securities.
Pledged Shares has the meaning set forth in
Paragraph 4 hereof.
Rights means rights, remedies,
powers, privileges and benefits.
Security Interest means the security interest granted and the pledge
and assignment made under Paragraph 3 hereof.
Trademarks has the meaning set forth in Paragraph 4 hereof.
UCC means the Uniform Commercial Code, including each such provision
as it may subsequently be renumbered, as enacted in the State of New York
or other applicable jurisdiction, as amended at the time in question.
3. SECURITY INTEREST. In order to secure the full and complete payment and
performance of the Obligations when due, Debtor hereby grants to Secured Party a
Security Interest in all of Debtor’s Rights, titles, and interests in and to the
Collateral and pledges, collaterally transfers, and assigns the Collateral to
Secured Party, all upon and subject to the terms and conditions of this Security
Agreement. Such Security Interest is granted and pledge and assignment are made as
security only and shall not subject Secured Party to, or transfer or in any way
affect or modify, any obligation of Debtor
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with respect to any of the Collateral or any transaction involving or giving rise
thereto. If the grant, pledge, or collateral transfer or assignment of any
specific item of the Collateral is expressly prohibited by any contract, license,
law or regulation, then the Security Interest created hereby nonetheless remains
effective to the extent allowed by the UCC or other applicable Law, but is
otherwise limited by that prohibition.
4. COLLATERAL. As used herein, the term “Collateral” means the following items and
types of property, wherever located, now owned or in the future existing or acquired
by Debtor, and all proceeds and products thereof, and any substitutes or
replacements therefor:
(a) all personal property and fixture property of every kind and nature
including, without limitation, all accounts, chattel paper (whether tangible
or electronic), goods (including inventory, equipment, and any accessions
thereto), software, instruments, investment property, documents, deposit
accounts, money, commercial tort claims, letters of credit and
letter-of-credit rights, supporting obligations, Tax refunds, and
general intangibles (including payment intangibles);
(b) all Rights, titles, and interests of Debtor in and to all
outstanding stock, equity, or other investment securities owned by Debtor,
including, without limitation, all capital stock of each Subsidiary of
Debtor set forth on Annex B-1 (“Pledged Shares”);
(c) all Rights, titles, and interests of Debtor in and to all
promissory notes and other instruments payable to Debtor, including, without
limitation, all inter-company notes from Subsidiaries and those set forth on
Annex B-1 (“Collateral Notes”) and all Rights, titles, interests, and Liens
Debtor may have, be, or become entitled to under all present and future loan
agreements, security agreements, pledge agreements, deeds of trust,
mortgages, guarantees, or other documents assuring or securing payment of or
otherwise evidencing the Collateral Notes, including, without limitation,
those set forth on Annex B-1 (“Collateral Note Security”);
(d) the Partnership/Limited Liability Company Interests and all Rights
of Debtor with respect thereto, including, without limitation, all
Partnership/Limited Liability Company Interests set forth on
Annex B-1 and
all of Debtor’s distribution rights, income rights, liquidation interest,
accounts, contract rights, general intangibles, notes, instruments, drafts,
and documents relating to the Partnership/Limited Liability Company
Interests;
(e) (i) all copyrights (whether statutory or common law, registered or
unregistered), works protectable by copyright, copyright registrations,
copyright licenses, and copyright applications of Debtor, including, without
limitation, all of Debtor’s Right, title, and interest in and to all
copyrights registered in the United States Copyright Office or anywhere else
in the world and also including, without limitation, the copyrights set
forth on Annex B-2; (ii) all renewals, extensions, and modifications
thereof, (iii) all income, licenses, royalties, damages, profits, and
payments relating to or payable under any of the foregoing; (iv) the Right
to xxx for past, present, or future infringements of any of the foregoing;
and (v) all other rights and benefits relating to any of the foregoing
throughout the world; in each case, whether now owned or hereafter acquired
by Debtor (“Copyrights”);
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(f) (i) all patents, patent applications, patent licenses, and
patentable inventions of Debtor, including, without limitation,
registrations, recordings, and applications thereof in the United States
Patent and Trademark Office or in any similar office or agency of the United
States of America, any state thereof or any other country or any political
subdivision thereof including, without limitation, those set forth on Annex
B-2, and all of the inventions and improvements described and claimed
therein; (ii) all continuations, divisions, renewals,
extensions, modifications, substitutions, reexaminations,
continuations-in-part, or reissues of any of the foregoing; (iii) all
income, royalties, profits, damages, awards, and payments relating to or
payable under any of the foregoing; (iv) the right to xxx for past, present,
and future infringements of any of the foregoing; and (v) all other rights
and benefits relating to any of the foregoing throughout the world; in each
case, whether now owned or hereafter acquired by Debtor (“Patents”);
(g) (i) all trademarks, trademark licenses, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, certification marks, collective marks, logos, other
business identifiers, all registrations, recordings, and applications
thereof including, without limitation, registrations, recordings, and
applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any
other country or any political subdivision thereof including, without
limitation, those set forth on Annex B-2; (ii) all reissues, extensions, and
renewals thereof; (iii) all income, royalties, damages, and payments now or
hereafter relating to or payable under any of the foregoing including,
without limitation, damages or payments for past or future infringements of
any of the foregoing; (iv) the right to xxx for past, present, and future
infringements of any of the foregoing; (v) all rights corresponding to any
of the foregoing throughout the world; and (vi) all goodwill associated with
and symbolized by any of the foregoing, in each case, whether now owned or
hereafter acquired by Debtor (“Trademarks”, and collectively with the
Copyrights and the Patents, the “Intellectual Property”);
(h) (i) all of Debtor’s Rights, titles, and interests in, to, and
under those contracts pursuant to which a default in or breach of the
performance or observance of any provision could reasonably be expected to
result in the opinion of the Secured Party in a Material Adverse Effect
(the “Material Agreements”) including, without limitation, all Rights of
Debtor to receive moneys due and to become due under or pursuant to the
Material Agreements; (ii) all rights of Debtor to receive proceeds of any
insurance, indemnity, warranty, or guaranty with respect to the Material
Agreements; (iii) all claims of Debtor for damages arising out of or for
breach of or default under the Material Agreements; and (iv) all rights of
Debtor to compel performance and otherwise exercise all rights and
remedies under the Material Agreements;
(i) all present and future automobiles, trucks, truck tractors,
trailers, semi-trailers, or other motor vehicles or rolling stock, now
owned or hereafter acquired by such Debtor (collectively, the “Vehicles”);
(j) any and all material deposit accounts, bank accounts, investment
accounts, or securities accounts, now owned or hereafter acquired or
opened by Debtor including, without limitation, any such accounts set
forth on Annex B-1, and any account which is a replacement or
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substitute for any of such accounts, together with all monies,
instruments, certificates, checks, drafts, wire transfer receipts, and
other property deposited therein and all balances therein (the “Deposit
Accounts”);
(k) all permits, licenses and other authorizations (“Authorizations”)
issued by any governmental authority, to the extent and only to the extent
that the grant of a security interest in any such Authorization does not
result in the forfeiture of, or default under, any such Authorization;
(1) all present and future distributions, income, increases, profits,
combinations, reclassifications, improvements, and products of,
accessions, attachments, and other additions to, tools, parts, and
equipment used in connection with, and substitutes and replacements for,
all or part of the Collateral described above;
(m) all present and future accounts, contract rights, general
intangibles, chattel paper, documents, instruments, cash and noncash
proceeds, and other Rights arising from or by virtue of, or from the
voluntary or involuntary sale or other disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or proceeds
payable by virtue of warranty or other claims against the manufacturer of,
or claims against any other Person with respect to, all or any part of the
Collateral heretofore described in this clause or otherwise; and
(n) all present and future security for the payment to Debtor or any
Subsidiary of any of the Collateral described above and goods which gave
or will give rise to any such Collateral or are evidenced, identified, or
represented therein or thereby.
The description of the Collateral contained in this Paragraph 4 shall not be deemed
to permit any action prohibited by this Security Agreement or by the terms
incorporated in this Security Agreement.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to
Secured Party that:
(a) Credit Agreement. Certain representations and
warranties in the Credit Agreement are applicable to Debtor or its
assets or operations, and each such representation is true and correct, in
all material respects.
(b) Binding Obligation/Perfection. This Security Agreement
creates a legal, valid, and binding Lien in and to the Collateral in favor
of Secured Party and enforceable against Debtor. For Collateral in which the
Security Interest may be perfected by the filing of Financing Statements
pursuant to Article 9 of the UCC, once those Financing Statements have been
properly filed in the jurisdictions described on Annex A hereto, the
Security Interest in that Collateral will be fully perfected and the
Security Interest will constitute a first-priority Lien on such Collateral,
subject only to Permitted Liens. With respect to Collateral consisting of
investment property (other than Pledged Securities covered by
Paragraph 5
(j), Deposit Accounts, electronic chattel paper, letter-of-credit rights,
and instruments, upon the delivery of such Collateral to Secured Party or
delivery of an executed Control Agreement with respect to
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such Collateral, the Security Interest in that Collateral will be fully
perfected and the Security Interest will constitute a first-priority Lien
on such Collateral, subject only to Permitted Liens. None of the
Collateral has been delivered nor control with respect thereto given to
any Person other than the Administrative Agent. Other than the Financing
Statements and Control Agreements with respect to this Security Agreement,
there are no other financing statements or control agreements covering any
Collateral, other than those evidencing Permitted Liens. The creation of
the Security Interest does not require the consent of any Person that has
not been obtained.
(c) Debtor Information. Debtor’s exact legal name, mailing
address, jurisdiction of organization, type of entity, and state issued
organizational identification number are as set forth on Annex A hereto.
(d)
Location/Fixtures. (i) Debtor’s place of business and chief
executive office is where Debtor is entitled to receive notices hereunder;
the present and foreseeable location of debtor’s books and records
concerning any of the Collateral that is accounts is as set forth on Annex A
hereto, and the location of all other Collateral, including, without
limitation, Debtor’s inventory and equipment (but excluding fixtures) is as
set forth on Annex A hereto; and, except as noted on Annex A hereto, all
such books, records, and Collateral are in Debtor’s possession, and (ii)
substantially all the Collateral that is or may be fixtures is located on or
affixed to the real property described in deeds of trust or mortgages
executed by Debtor in favor of Secured Party pursuant to the Credit
Agreement or on Annex A hereto.
(e) Governmental Authority. Other than the filing of
Financing Statements contemplated hereby, appropriate filings to perfect
the Security Interest in the Intellectual Property and the notation of a
Lien in favor of the Secured Party on any motor vehicle certificate of
title, no Authorization, approval, or other action by, and no notice to or
filing with, any Governmental Authority is required either (i) for the
pledge by Debtor of the Collateral pursuant to this Security Agreement or
for the execution, delivery, or performance of this Security Agreement by
Debtor, or (ii) for the exercise by Secured Party of the voting or other
Rights provided for in this Security Agreement or the remedies in respect of
the Collateral pursuant to this Security Agreement (except as may be
required in connection with the disposition of the Pledged Securities by
Laws affecting the offering and sale of securities generally).
(f) Maintenance of Collateral. All tangible Collateral which is
useful in and necessary to Debtor’s business is in good repair and
condition, ordinary wear and tear excepted.
(g) Liens. Debtor owns, leases or has valid rights to use all
presently existing Collateral, and will acquire or lease all
hereafter-acquired Collateral, free and clear of all Liens, except Permitted
Liens.
(h)
Collateral. Annex B-1 accurately lists all Collateral
Notes, Collateral Note Security, Pledged Shares, Partnership/Limited
Liability Company Interests, commercial tort claims, and Deposit Accounts.
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(i)
Instruments, Chattel Paper, Collateral Notes, and Collateral
Note Security. All material instruments and chattel paper including,
without limitation, the Collateral Notes, have been delivered to Secured
Party, together with corresponding endorsements duly executed by Debtor in
favor of Secured Party, and such endorsements have been duly and validly
executed and are binding and enforceable against Debtor in accordance with
their terms. Each material Collateral Note and the documents evidencing
the Collateral Note Security are in full force and effect; there have been
no renewals or extensions of, or amendments, modifications, or supplements
which would materially adversely affect such Collateral Notes or
Collateral Note Security; and no “default” or “event of default” has
occurred and is continuing under any such Collateral Note or documents
evidencing the Collateral Note Security. Debtor has good title to the
Collateral Notes and Collateral Note Security, and such Collateral Notes
and Collateral Note Security are free from any claim for credit,
deduction, or allowance of an Obligor and free from any defense,
condition, dispute, setoff, or counterclaim which could materially
adversely affect the value thereof, and there is no extension or
indulgence with respect thereto.
(j)
Pledged Securities, Pledged Shares. All Collateral that
is Pledged Shares is duly authorized, validly issued, fully paid, and
non-assessable (except to the extent required by applicable Law), and the
transfer thereof is not subject to any restrictions, other than
restrictions imposed hereunder and by applicable securities and corporate
Laws or Permitted Liens. The Pledged Securities securing the Obligations
as defined in the Credit Agreement include 100% of the issued and
outstanding common stock or other equity interests owned by Debtor of each
Subsidiary of Debtor. Debtor has good title to the Pledged Securities,
free and clear of all Liens and encumbrances thereon (except for the
Security Interest created hereby or Permitted Liens), and has delivered to
Secured Party (i) all stock certificates, or other instruments or
documents representing or evidencing the Pledged Securities, together with
corresponding assignment or transfer powers duly executed in blank by
Debtor, and such powers have been duly and validly executed and are
binding and enforceable against Debtor in accordance with their terms or
(ii) to the extent such Pledged Securities are uncertificated, an executed
Acknowledgment of Pledge in the form of Annex D with respect to such
Pledged Securities. The pledge of the Pledged Securities in accordance
with the terms hereof creates a valid and perfected first priority
security interest in the Pledged Securities securing payment of the
Obligations, subject to Permitted Liens.
(k) Partnership/Limited Liability Company Interests. Each
Partnership/Limited Liability Company issuing a Partnership/Limited
Liability Company Interest, is duly organized, currently existing, and in
good standing in the jurisdiction of its formation; there have been no
material amendments, modifications, or supplements to any agreement or
certificate creating any Partnership/Limited Liability Company or any
material contract relating to the Partnerships/Limited Liability
Companies, of which Secured Party has not been advised in writing; no
event of default, default, breach, or potential default has occurred and
is continuing under any Partnership/Limited Liability Company Agreement,
except for such defaults or breaches that would not reasonably be expected
to result in a Material Adverse Effect; and no approval or consent of the
partners of any Partnership/Limited Liability Company is required as a
condition to the validity and enforceability of the Security Interest
created hereby or the consummation of the transactions contemplated hereby
which has not been duly obtained by Debtor. Debtor has good title to the
Partnership/Limited Liability Company Interests free and
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clear of all Liens and encumbrances (except for the Security Interest
granted hereby or Permitted Liens). The Partnership/Limited Liability
Company Interests are validly issued, fully paid, and nonassessable
(except to the extent required by applicable Law) and are not subject to
statutory, contractual, or other restrictions governing their transfer,
ownership, or control, except as set forth in the applicable
Partnership/Limited Liability Company Agreements or applicable securities
Laws or Permitted Liens. All capital contributions required to be made by
the terms of the Partnership/Limited Liability Company Agreements for each
Partnership/Limited Liability Company have been made. No
Partnership/Limited Liability Company Interests are evidenced by
certificates.
(1) Accounts. All Collateral that is accounts, contract
rights, chattel paper, instruments, payment intangibles, or general
intangibles is free from any claim for credit, deduction, or allowance of
an Obligor, from any defense, condition, dispute, setoff, or counterclaim
(collectively “Deductions”), and there is no extension or indulgence with
respect thereto, except to the extent such Deductions, extensions and
indulgences could not reasonably be expected to have a Material Adverse
Effect.
(m) Deposit Accounts. With respect to the Deposit Accounts,
(i) Debtor maintains each Deposit Account with the banks listed on Annex
B-1 hereto, (ii) upon request by the Administrative Agent, Debtor shall
use its reasonable efforts to, within thirty (30) days of such request,
cause each such bank to acknowledge to Secured Party that each such
Deposit Account is subject to the Security Interest and Liens herein
created, that the pledge of such Deposit Account has been recorded in the
books and records of such bank, and that Secured Party shall have
“control” (as defined in the UCC) over such Deposit Account, and (iii)
Debtor has the legal Right to pledge and assign to Secured Party the funds
deposited and to be deposited in each such Deposit Account.
(n) Intellectual Property.
(i) All of the Intellectual Property is subsisting, valid, and
enforceable (except where any failure to be subsisting, valid and
enforceable would not reasonably be expected to have a Material
Adverse Effect). The information contained on Annex B-2 hereto is
true, correct and complete. All issued Patents, Patent applications,
registered Trademarks, Trademark applications, registered
Copyrights, and Copyright applications of Debtor are identified on
Annex B-2 hereto.
(ii) Except for off-the-shelf software and other Intellectual
Property of which Debtor is a licensee (as to which this
representation is inapplicable), Debtor is the sole and exclusive
owner of, the entire and unencumbered Right, title, and interest in
and to the Intellectual Property owned by Debtor free and clear of
any Liens including, without limitation, any pledges, assignments,
licenses, user agreements, and covenants by Debtor not to xxx third
Persons, other than Permitted Liens or licenses permitted by
Paragraph 8(c).
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(iii) As of the date hereof, to Debtor’s knowledge, no third
party is infringing any of Debtor’s Rights under the Intellectual
Property.
(iv) Debtor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and Taxes to
maintain each material item of the Intellectual Property in full
force and effect throughout the world, as applicable.
(v) Each of the Patents and Trademarks identified on Annex B-2
hereto, to the extent required in Debtor’s reasonable business
judgment, has been properly registered with the United States Patent
and Trademark Office and in corresponding offices throughout the
world (where appropriate) and each of the Copyrights identified on
Annex B-2 hereto has been properly registered with the United States
Copyright Office and in corresponding offices throughout the world
(where appropriate).
(vi) As of the date hereof, to Debtor’s knowledge, no claims
with respect to the Intellectual Property have been asserted and are
pending (i) to the effect that the sale, licensing, pledge, or use
of any of the products of Debtor’s business infringes any other
party’s valid copyright, trademark, service xxxx, trade secret, or
other intellectual property Right, (ii) against the use by Debtor of
any Intellectual Property used in Debtor’s business as currently
conducted, or (iii) challenging the ownership or use by Debtor of
any of the Intellectual Property that Debtor purports to own or use.
The foregoing representations and warranties will be true and correct in all
material respects with respect to any additional Collateral or additional
specific descriptions of certain Collateral delivered to Secured Party in the
future by Debtor. The failure of any of these representations or warranties or
any description of Collateral therein to be accurate or complete shall not
impair the Security Interest in any such Collateral.
6. COVENANTS. So long as any Lenders are committed to make Credit Extensions under
the Credit Agreement, and until the Obligations are paid and performed in full
(except as provided in Sections 10.01(d) and 10.01(e) of the Credit Agreement),
Debtor covenants and agrees with Secured Party that Debtor will:
(a) Credit Agreement. (i) Comply with, perform, and be bound by
all applicable covenants and agreements in the Credit Agreement, each of
which is hereby ratified and confirmed.
(b)
Books and Records Concerning Collateral; Inspection Rights.
Debtor shall comply with the provisions of Section 6.09 and 6.10 regarding
records concerning and inspection rights relating to the Collateral. In
addition, from time to time at the request of Secured Party deliver to
Secured Party such information regarding Debtor that is in the possession of
Debtor as Secured Party may reasonably request.
(c) Annexes. Together with the delivery of compliance
certificates pursuant to Section 6.02(a) of the Credit Agreement, update all
annexes hereto if any information therein
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shall become inaccurate or incomplete and such updated Annexes shall
replace the existing Annexes for all purposes of this Agreement.
Notwithstanding any other provision herein, Debtor’s failure to describe
any Collateral required to be listed on any annex hereto shall not impair
Secured Party’s Security Interest in the Collateral.
(d) Perform Obligations. Perform all of Debtor’s duties under
and in connection with each transaction to which the Collateral, or any
material part thereof, relates, in the ordinary course of business except
when in Debtor’s business judgment non-performance is justified.
Notwithstanding anything to the contrary contained herein, (i) Debtor shall
remain liable under the contracts, agreements, documents, and instruments
included in the Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this Security
Agreement had not been executed, (ii) the exercise by Secured Party of any
of its Rights or remedies hereunder shall not release Debtor from any of its
duties or obligations under the contracts, agreements, documents, and
instruments included in the Collateral, and (iii) Secured Party shall not
have any indebtedness, liability, or obligation under any of the contracts,
agreements, documents, and instruments included in the Collateral by reason
of this Security Agreement, and Secured Party shall not be obligated to
perform any of the obligations or duties of Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(e) Intentionally Deleted.
(f) Collateral in Trust. Hold in trust (and not commingle with
other assets of Debtor) for Secured Party all Collateral that is chattel
paper, instruments, Collateral Notes, Pledged Securities, or documents at
any time received by Debtor, and promptly deliver same to Secured Party,
unless Secured Party at its option (which may be evidenced only by a writing
signed by Secured Party stating that Secured Party elects to permit Debtor
to so retain) permits Debtor to retain the same, but any chattel paper,
instruments, Collateral Notes, Pledged Securities, or documents so retained
shall be marked to state that they are assigned to Secured Party; each such
instrument shall be endorsed to the order of Secured Party (but the failure
of same to be so marked or endorsed shall not impair the Security Interest
thereon).
(g) Control. Execute all documents and take any action required
by Secured Party in order for Secured Party to obtain “control” (as defined
in the UCC) with respect to Collateral consisting of Deposit Accounts,
investment property, uncertificated Pledged Securities, and letter-of-credit
rights. If Debtor at any time holds or acquires an interest in any
electronic chattel paper or any “transferable record,” as that term is
defined in the federal Electronic Signatures in Global and National Commerce
Act, or in the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, promptly notify Secured Party thereof and, at the
request of Secured Party, take such action as Secured Party may reasonably
request to vest in Secured Party control under the UCC of such electronic
chattel paper or control under the federal Electronic Signatures in Global
and National Commerce Act or, as the case may be, the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record.
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(h) Further Assurances. At Debtor’s expense and Secured
Party’s request, before or after a Default or Event of Default: (i) file
or cause to be filed such applications and take such other actions as
Secured Party may request to obtain the consent or approval of any
Governmental Authority to Secured Party’s Rights hereunder including,
without limitation, the Right to sell all the Collateral upon an Event of
Default without additional consent or approval from such Governmental
Authority (and, because Debtor agrees that Secured Party’s remedies at Law
for failure of Debtor to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages,
Debtor agrees that its covenants in this provision may be specifically
enforced); (ii) from time to time promptly execute and deliver to Secured
Party all such other assignments, certificates, supplemental documents,
and financing statements, and do all other acts or things as Secured Party
may reasonably request in order to more fully create, evidence, perfect,
continue, and preserve the priority of the Security Interest and to carry
out the provisions of this Security Agreement; and (iii) pay all filing
fees in connection with any financing, continuation, or termination
statement or other instrument with respect to the Security Interests.
(i) Encumbrances. Not create, permit, or suffer to exist, and
shall defend the Collateral against, any Lien or other encumbrance on the
Collateral, other than Permitted Liens, and shall defend Debtor’s Rights
in the Collateral and Secured Party’s Security Interest in the Collateral
against the claims and demands of all Persons except those holding or
claiming Permitted Liens. Debtor shall do nothing to impair the Rights of
Secured Party in the Collateral.
(j) Estoppel and Other Agreements and Matters. Upon the
reasonable request of Secured Party, either (i) use commercially
reasonable efforts to cause the landlord or lessor for each location where
any of its inventory or equipment is maintained to execute and deliver to
Secured Party an estoppel and subordination agreement in such form as may
be reasonably acceptable to Secured Party and its counsel, or (ii) deliver
to Secured Party a legal opinion or other evidence (in each case that is
reasonably satisfactory to Secured Party and it counsel) that neither the
applicable lease nor the Laws of the jurisdiction in which that location
is situated provide for contractual, common Law, or statutory landlord’s
Liens that is senior to or pari passu with the Security Interest.
(k) Fixtures. For any Collateral that is a fixture or an
accession which has been attached to real estate or other goods prior to
the perfection of the Security Interest, use commercially reasonable
efforts to furnish to Secured Party, upon reasonable demand, a disclaimer
of interest in each such fixture or accession and a consent in writing to
the Security Interest of Secured Party therein, signed by all Persons
having any interest in such fixture or accession by virtue of any interest
in the real estate or other goods to which such fixture or accession has
been attached.
(l) Certificates of Title. Upon the request of Secured Party,
if a certificate of title is issued or outstanding with respect to any
Vehicle or other Collateral with a fair market value of at least $50,000,
cause the Security Interest to be properly noted thereon.
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(m) Warehouse Receipts Non-Negotiable. If any warehouse
receipt or receipt in the nature of a warehouse receipt is issued in
respect of any of the Collateral, agree that such warehouse receipt or
receipt in the nature thereof shall not be “negotiable” (as such term is
used in Section 7-104 of the UCC) unless such warehouse receipt or receipt
in the nature thereof is delivered to Secured Party.
(n) Impairment of Collateral. Not use any material portion of
the Collateral, or permit the same to be used, for any unlawful purpose,
in any manner that is reasonably likely to materially adversely impair the
value or usefulness of the Collateral, or in any manner inconsistent with
the provisions or requirements of any policy of insurance thereon nor
affix or install any accessories, equipment, or device on the Collateral
or on any component thereof if such addition will materially impair the
original intended function or use of the Collateral or such component.
(o) Collateral Notes and Collateral Note Security. Without
the prior written consent of Secured Party not (i) materially modify or
substitute, or permit material modification or substitution of, any
Collateral Note or any document evidencing the Collateral Note Security,
if the effect thereof would be to materially adversely affect the value of
the Collateral Notes and Collateral Note Security taken as a whole, or
(ii) release any material portion of any Collateral Note Security unless
paid in full or otherwise specifically required by the terms thereof,
except in the exercise of the Debtor’s reasonable business judgment.
(p) Securities. Except as permitted by the Credit Agreement,
not sell, exchange, or otherwise dispose of, or grant any option, warrant,
or other Right with respect to, any of the Pledged Securities; and take
any action requested by Secured Party to allow Secured Party to fully
enforce its Security Interest in the Pledged Securities including, without
limitation, the filing of any claims with any court, liquidator, trustee,
custodian, receiver, or other like person or party.
(q) Depository Bank. With respect to any Deposit Accounts,
(i) maintain the Deposit Accounts at the banks (a “Depository Bank”)
described on Annex B-1 or such additional depository banks as described in
the notices given pursuant to clause (iv) of this Section 6(q) as have
complied with item (iv) hereof, (ii) upon request of the Secured Party,
deliver to each depository bank a letter in the form of Annex C hereto
with respect to Secured Party’s Rights in such Deposit Account (or on such
other reasonable form as may be provided by the Depository Bank) and use
commercially reasonable efforts to obtain the execution of such letter by
each Depository Bank that the pledge of such Deposit Account has been
recorded in the books and records of such bank and that Secured Party
shall have dominion and control over such Deposit Account; (iii) upon
request of the Secured Party, deliver to Secured Party all certificates or
instruments, if any, now or hereafter representing or evidencing the
Deposit Accounts, accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Secured Party; and (iv) notify Secured Party upon establishing any
additional Deposit Accounts and, at the request of Secured Party, use
commercially reasonable efforts to obtain from such depository bank an
executed letter substantially in the form of Annex C (or on such other
reasonable form as may be provided by the Depository Bank) and deliver the
same to Secured Party. Secured Party agrees not to exercise
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control over such Deposit Account unless an Event of Default shall have
occurred and be continuing.
(t) Marking of Chattel Paper. At the request of Secured
Party, not create any chattel paper without placing a legend on the
chattel paper acceptable to Secured Party indicating that Secured Party
has a security interest in the chattel paper.
(u) Modification of Accounts. In accordance with prudent
business practices, endeavor to collect or cause to be collected from each
account debtor under its accounts, as and when due, any and all amounts
owing under such accounts. Except in the ordinary course of business
consistent with prudent business practices and industry standards, without
the prior written consent of Secured Party, Debtor shall not (i) grant any
extension of time for any payment with respect to any of the accounts,
(ii) compromise, compound, or settle any of the accounts for less than the
full amount thereof, (iii) release, in whole or in part, any Person liable
for payment of any of the accounts, (iv) allow any credit or discount for
payment with respect to any account other than trade discounts granted in
the ordinary course of business, (v) release any Lien or guaranty securing
any account, or (vi) modify or substitute, or permit the modification or
substitution of, any contract to which any of the Collateral which is
accounts relates.
(v) Intellectual Property.
(i) Prosecute diligently all applications in respect of
Intellectual Property, now or hereafter pending;
(ii) Except to the extent not required in Debtor’s reasonable
business judgment, make federal applications on all of its
unpatented but patentable inventions and all of its registrable but
unregistered Copyrights and Trademarks;
(iii) Preserve and maintain all of its material Rights in the
Intellectual Property and protect the Intellectual Property from
infringement, unfair competition, cancellation, or dilution by all
appropriate action necessary in Debtor’s reasonable business
judgment including, without limitation, the commencement and
prosecution of legal proceedings to recover damages for infringement
and to defend and preserve its rights in the Intellectual Property;
(iv) Not abandon any of the Intellectual Property necessary to
the conduct of its business in the exercise of Debtor’s reasonable
business judgment;
(v) Maintain the quality of any and all products and services
with respect to which the Intellectual Property is used;
(vi) Not enter into any agreement including, but not limited to
any licensing agreement, that is or may be inconsistent with
Debtor’s obligations under this Security Agreement or any of the
other Loan Documents;
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(vii) Give Secured Party prompt written notice if Debtor shall
obtain Rights to or become entitled to the benefit of any
Intellectual Property not identified on Annex B-2 hereto; and
(viii) If a Default or Event of Default exists, use its
reasonable efforts to obtain any consents, waivers, or agreements
necessary to enable Secured Party to exercise its rights and
remedies with respect to the Intellectual Property.
7. DEFAULT; REMEDIES. If an Event of Default exists, Secured Party may, at its
election (but subject to the terms and conditions of the Credit Agreement),
exercise any and all Rights available to a secured party under the UCC and other
applicable law, in addition to any and all other Rights afforded by the Loan
Documents, at law, in equity, or otherwise including, without limitation, (a)
requiring Debtor to assemble all or part of the Collateral and make it available
to Secured Party at a place to be designated by Secured Party which is reasonably
convenient to Debtor and Secured Party, (b) to the extent permitted by Debtor’s
insurance carrier, surrendering any policies of insurance on all or part of the
Collateral and receiving and applying the unearned premiums as a credit on the
Obligations, (c) applying by appropriate judicial proceedings for appointment of
a receiver for all or part of the Collateral (and Debtor hereby consents to any
such appointment), and (d) applying to the Obligations any cash held by Secured
Party under this Security Agreement, including, without limitation, any cash in
the Cash Collateral Account (defined in Section 8(h)).
(a) Notice. Reasonable notification of the time and place of
any public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the Collateral
is to be made, shall be sent to Debtor and to any other Person entitled to
notice under the UCC; provided that, if any of the Collateral threatens to
decline speedily in value or is of the type customarily sold on a recognized
market, Secured Party may sell or otherwise dispose of the Collateral
without notification, advertisement, or other notice of any kind. It is
agreed that notice sent or given not less than ten Business Days prior to
the taking of the action to which the notice relates is reasonable
notification and notice for the purposes of this subparagraph.
(b)
Condition of Collateral; Warranties. Secured Party has no
obligation to clean-up or otherwise prepare the Collateral for sale. Secured
Party may sell the Collateral without giving any warranties as to the
Collateral. Secured Party may specifically disclaim any warranties of title
or the like. This procedure will not be considered to affect adversely the
commercial reasonableness of any sale of the Collateral.
(c) Compliance with Other Laws. Secured Party may comply with
any applicable state or federal law requirements in connection with a
disposition of the Collateral and compliance will not be considered to
adversely affect the commercial reasonableness of any sale of the
Collateral.
(d) Sales of Pledged Securities.
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(i) Debtor agrees that, because of the Securities Act of 1933,
as amended, or the rules and regulations promulgated thereunder
(collectively, the “Securities Act”), or any other Laws or
regulations, and for other reasons, there may be legal or practical
restrictions or limitations affecting Secured Party in any attempts
to dispose of certain portions of the Pledged Securities and for the
enforcement of its Rights. For these reasons, Secured Party is
hereby authorized by Debtor, but not obligated, upon the occurrence
and during the continuation of an Event of Default, to sell all or
any part of the Pledged Securities at private sale, subject to an
investment letter or in any other manner which will not require the
Pledged Securities, or any part thereof, to be registered in
accordance with the Securities Act or any other Laws or regulations,
at a reasonable price at such private sale or other distribution in
the manner mentioned above. Debtor understands that Secured Party
may in its discretion approach a limited number of potential
purchasers and that a sale under such circumstances may yield a
lower price for the Pledged Securities, or any part thereof, than
would otherwise be obtainable if such Collateral were either offered
to a larger number of potential purchasers, registered under the
Securities Act, or sold in the open market. Debtor agrees that any
such private sale made under this Paragraph 7(d) shall be deemed to
have been made in a commercially reasonable manner, and that Secured
Party has no obligation to delay the sale of any Pledged Securities
to permit the issuer thereof to register it for public sale under
any applicable federal or state securities Laws.
(ii) Secured Party is authorized, in connection with any such
sale, (A) to restrict the prospective bidders on or purchasers of
any of the Pledged Securities to a limited number of sophisticated
investors who will represent and agree that they are purchasing for
their own account for investment and not with a view to the
distribution or sale of any of such Pledged Securities, and (B) to
impose such other limitations or conditions in connection with any
such sale as Secured Party reasonably deems necessary in order to
comply with applicable Law. Debtor covenants and agrees that it will
execute and deliver such documents and take such other action as
Secured Party reasonably deems necessary in order that any such sale
may be made in compliance with applicable Law. Upon any such sale,
Secured Party shall have the Right to deliver, assign, and transfer
to the purchaser thereof the Pledged Securities so sold. Each
purchaser at any such sale shall hold the Pledged Securities so sold
absolutely free from any claim or Right of Debtor of whatsoever
kind, including any equity or Right of redemption of Debtor. Debtor,
to the extent permitted by applicable Law, hereby specifically
waives all Rights of redemption, stay, or appraisal which it has or
may have under any Law now existing or hereafter enacted.
(iii) Debtor agrees that ten days’ written notice from Secured
Party to Debtor of Secured Party’s intention to make any such public
or private sale or sale at a broker’s board or on a securities
exchange shall constitute reasonable notice under the UCC. Such
notice shall (A) in case of a public sale, state the time and place
fixed for such sale, (B) in case of sale at a broker’s board or on a
securities exchange, state the board or exchange at which such a
sale is to be made and the day on which the Pledged Securities, or
the portion thereof so being sold, will first be offered to sale at
such board or exchange, and
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(C) in the case of a private sale, state the day after which such
sale may be consummated. 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. At any
such sale, the Pledged Securities may be sold in one lot as an
entirety or in separate parcels, as Secured Party may reasonably
determine. Secured Party shall not be obligated to make any such
sale pursuant to any such notice. Secured Party may, without notice
or publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned.
(iv) In case of any sale of all or any part of the Pledged
Securities on credit or for future delivery, the Pledged Securities
so sold may be retained by Secured Party until the selling price is
paid by the purchaser thereof, but Secured Party shall not incur any
liability in case of the failure of such purchaser to take up and
pay for the Pledged Securities so sold and in case of any such
failure, such Pledged Securities may again be sold upon like notice.
Secured Party, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at Law or in
equity to foreclose the Security Interests and sell the Pledged
Securities, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction.
(v) Without limiting the foregoing, or imposing upon Secured
Party any obligations or duties not required by applicable Law,
Debtor acknowledges and agrees that, in foreclosing upon any of the
Pledged Securities, or exercising any other Rights or remedies
provided Secured Party hereunder or under applicable Law, Secured
Party may, but shall not be required to, (A) qualify or restrict
prospective purchasers of the Pledged Securities by requiring
evidence of sophistication or creditworthiness, and requiring the
execution and delivery of confidentiality agreements or other
documents and agreements as a condition to such prospective
purchasers’ receipt of information regarding the Pledged Securities
or participation in any public or private foreclosure sale process,
(B) provide to prospective purchasers business and financial
information regarding Debtor and its Subsidiaries available in the
files of Secured Party at the time of commencing the foreclosure
process, without the requirement that Secured Party obtain, or seek
to obtain, any updated business or financial information or verify,
or certify to prospective purchasers, the accuracy of any such
business or financial information, or (C) offer for sale and sell
the Pledged Securities with or without first employing an appraiser,
investment banker, or broker with respect to the evaluation of the
Pledged Securities, the solicitation of purchasers for Pledged
Securities, or the manner of sale of Pledged Securities.
(e) Application of Proceeds. Secured Party shall apply the
proceeds of any sale or other disposition of the Collateral under this
Paragraph 7 in the following order: first, to the payment of all expenses
incurred in retaking, holding, and preparing any of the Collateral for
sale(s) or other disposition, in arranging for such sale(s) or other
disposition, and in actually selling or disposing of the same (all of
which are part of the Obligations); second, toward repayment of amounts
expended by Secured Party under Paragraph 8; and third, toward payment
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of the balance of the Obligations in the order and manner specified in the
Credit Agreement. Any surplus remaining shall be delivered to Debtor or as
a court of competent jurisdiction may direct. If the proceeds are
insufficient to pay the Obligations in full, Debtor shall remain liable
for any deficiency.
(f) Sales on Credit. If Secured Party sells any of the
Collateral upon credit, Debtor will be credited only with payments
actually made by the purchaser, received by the Secured Party, and applied
to the indebtedness of the purchaser. In the event the purchaser fails to
pay for the Collateral, Secured Party may resell the Collateral.
8. OTHER RIGHTS OF SECURED PARTY.
(a) Performance. If Debtor fails to keep the Collateral in good
repair, working order, and condition, as required by the Loan Documents, or
fails to pay when due all Taxes on any of the Collateral in the manner
required by the Loan Documents, or fails to preserve the priority of the
Security Interest in any of the Collateral, or fails to keep the Collateral
insured as required by the Loan Documents, or otherwise fails to perform any
of its obligations under the Loan Documents with respect to the Collateral,
then Secured Party may, at its option, but without being required to do so,
make such repairs, pay such Taxes, prosecute or defend any suits in relation
to the Collateral, or insure and keep insured the Collateral in any amount
deemed appropriate by Secured Party, or take all other action which Debtor
is required, but has failed or refused, to take under the Loan Documents.
Any sum which may be expended or paid by Secured Party under this
subparagraph (including, without limitation, court costs and reasonable
attorneys’ fees) shall bear interest from the dates of expenditure or
payment at the Default Rate until paid and, together with such interest,
shall be payable by Debtor to Secured Party upon demand and shall be part of
the Obligations.
(b) Collection. If an Event of Default exists and upon notice
from Secured Party, each Obligor with respect to any payments on any of the
Collateral (including, without limitation, dividends and other distributions
with respect to the Pledged Securities and Partnership/Limited Liability
Company Interests, payments on Collateral Notes, insurance proceeds payable
by reason of loss or damage to any of the Collateral, or payments or
distributions with respect to Deposit Accounts) is hereby authorized and
directed by Debtor to make payment directly to Secured Party, regardless of
whether Debtor was previously making collections thereon. Subject to
Paragraph 8(f) hereof, until such notice is given, Debtor is authorized to
retain and expend all payments made on Collateral. If an Event of Default
exists, Secured Party shall have the Right in its own name or in the name of
Debtor to compromise or extend time of payment with respect to all or any
portion of the Collateral for such amounts and upon such terms as Secured
Party may determine; to demand, collect, receive, receipt for, xxx for,
compound, and give acquittances for any and all amounts due or to become due
with respect to Collateral; to take control of cash and other proceeds of
any Collateral; to endorse the name of Debtor on any notes, acceptances,
checks, drafts, money orders, or other evidences of payment on Collateral
that may come into the possession of Secured Party; to sign the name of
Debtor on any invoice or xxxx of lading relating to any Collateral, on any
drafts against Obligors or other Persons making payment with respect to
Collateral, on assignments and verifications of accounts or other Collateral
and on notices to
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Obligors making payment with respect to Collateral; to send requests for
verification of obligations to any Obligor; and to do all other acts and
things necessary to carry out the intent of this Security Agreement. If an
Event of Default exists and any Obligor fails or refuses to make payment
on any Collateral when due, Secured Party is authorized, in its sole
discretion, either in its own name or in the name of Debtor, to take such
action as Secured Party shall deem appropriate for the collection of any
amounts owed with respect to Collateral or upon which a delinquency
exists. Regardless of any other provision hereof, however, Secured Party
shall never be liable for its failure to collect, or for its failure to
exercise diligence in the collection of, any amounts owed with respect to
Collateral, nor shall it be under any duty whatsoever to anyone except
Debtor to account for funds that it shall actually receive hereunder.
Without limiting the generality of the foregoing, Secured Party shall have
no responsibility for ascertaining any maturities, calls, conversions,
exchanges, offers, tenders, or similar matters relating to any Collateral,
or for informing Debtor with respect to any of such matters (irrespective
of whether Secured Party actually has, or may be deemed to have, knowledge
thereof). The receipt of Secured Party to any Obligor shall be a full and
complete release, discharge, and acquittance to such Obligor, to the
extent of any amount so paid to Secured Party.
(c) Intellectual Property. For purposes of enabling Secured
Party to exercise its Rights and remedies under this Security Agreement and
enabling Secured Party and its successors and assigns to enjoy the full
benefits of the Collateral, Debtor hereby grants to Secured Party an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to Debtor) to use, license, or sublicense any of the
Intellectual Property. Debtor shall provide Secured Party with reasonable
access to all media in which any of the Intellectual Property may be
recorded or stored and all computer programs used for the completion or
printout thereof. This license shall also inure to the benefit of all
successors, assigns, and transferees of Secured Party. If an Event of
Default exists, Secured Party may require that Debtor assign all of its
Right, title, and interest in and to the Intellectual Property or any part
thereof to Secured Party or such other Person as Secured Party may designate
pursuant to documents satisfactory to Secured Party. If no Default or Event
of Default exists, Debtor shall have the exclusive, non-transferable Right
and license to use the Intellectual Property in the ordinary course of
business and the exclusive Right to grant to other Persons licenses and
sublicenses with respect to the Intellectual Property for full and fair
consideration.
(d) Record Ownership of Securities. If an Event of Default
exists, Secured Party at any time may have any Collateral that is Pledged
Securities and that is in the possession of Secured Party, or its nominee or
nominees, registered in its name, or in the name of its nominee or nominees,
as Secured Party; and, as to any Collateral that is Pledged Securities so
registered, Secured Party shall execute and deliver (or cause to be executed
and delivered) to Debtor all such proxies, powers of attorney, dividend
coupons or orders, and other documents as Debtor may reasonably request for
the purpose of enabling Debtor to exercise the voting Rights and powers
which it is entitled to exercise under this Security Agreement or to receive
the dividends and other distributions and payments in respect of such
Collateral that is Pledged Securities or proceeds thereof which it is
authorized to receive and retain under this Security Agreement.
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(e) Voting of Securities. As long as no Event of Default
exists, Debtor is entitled to exercise all voting Rights pertaining to any
Pledged Securities and Partnership/Limited Liability Company Interests;
provided however, that no vote shall be cast or consent, waiver, or
ratification given or action taken without the prior written consent of
Secured Party which would be inconsistent with or violate any provision of
this Security Agreement or any other Loan Document; and provided further
that Debtor shall give Secured Party at least five Business Days’ prior
written notice in the form of an officers’ certificate of the manner in
which it intends to exercise, or the reasons for refraining from exercising,
any voting or other consensual Rights pertaining to the Collateral or any
part thereof which might have a Material Adverse Effect on the value of the
Collateral or any part thereof. If an Event of Default exists and if Secured
Party elects to exercise such Right, the Right to vote any Pledged
Securities shall be vested exclusively in Secured Party. To this end, Debtor
hereby irrevocably constitutes and appoints Secured Party the proxy and
attorney-in-fact of Debtor, with full power of substitution, to vote, and to
act with respect to, any and all Collateral that is Pledged Securities
standing in the name of Debtor or with respect to which Debtor is entitled
to vote and act, subject to the understanding that such proxy may not be
exercised unless an Event of Default exists. The proxy herein granted is
coupled with an interest, is irrevocable, and shall continue until the
Obligations have been paid and performed in full.
(f) Certain Proceeds. Notwithstanding any contrary provision herein,
any and all
(i) dividends, interest, or other distributions paid or payable
other than in cash in respect of, and instruments and other property
received, receivable, or otherwise distributed in respect of, or in
exchange for, any Collateral;
(ii) dividends, interest, or other distributions hereafter paid
or payable in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution, or in connection with a
reduction of capital, capital surplus, or paid-in-surplus;
(iii) cash paid, payable, or otherwise distributed in
redemption of, or in exchange for, any Collateral; and
(iv) dividends, interest, or other distributions paid or
payable in violation of the Loan Documents,
shall be part of the Collateral hereunder, and shall, if received by
Debtor, be held in trust for the benefit of Secured Party, and shall
forthwith be delivered to Secured Party (accompanied by proper instruments
of assignment and/or stock and/or bond powers executed by Debtor in
accordance with Secured Party’s instructions) to be held subject to the
terms of this Security Agreement. Any cash proceeds of Collateral which
come into the possession of Secured Party during the continuance of an
Event of Default (including, without limitation, insurance proceeds) may,
at Secured Party’s option, be applied in whole or in part to the
Obligations (to the extent then due), be released in whole or in part to
or on the written instructions of Debtor for any general or specific
purpose, or be retained in whole or in part by Secured Party as additional
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Collateral. Any cash Collateral in the possession of Secured Party may be
invested by Secured Party in certificates of deposit issued by Secured
Party (if Secured Party issues such certificates) or by any state or
national bank having combined capital and surplus greater than
$100,000,000 with a short term rating from Xxxxx’x and S&P
of P-1 and
A-1+, respectively, or in securities issued or guaranteed by the United
States or any agency thereof. Secured Party shall never be obligated to
make any such investment and shall never have any liability to Debtor for
any loss which may result therefrom. All interest and other amounts earned
from any investment of Collateral may be dealt with by Secured Party in
the same manner as other cash Collateral. Except as specifically provided
herein, the provisions of this subparagraph are applicable whether or not
a Default or Event of Default exists.
(g) Use and Operation of Collateral. Should any Collateral
come into the possession of Secured Party, Secured Party may use or
operate such Collateral for the purpose of preserving it or its value
pursuant to the order of a court of appropriate jurisdiction or in
accordance with any other Rights held by Secured Party in respect of such
Collateral. Debtor covenants to promptly reimburse and pay to Secured
Party, at Secured Party’s request, the amount of all reasonable expenses
(including, without limitation, the cost of any insurance and payment of
Taxes or other charges) incurred by Secured Party in connection with its
custody and preservation of Collateral, and all such expenses, costs,
Taxes, and other charges shall bear interest at the Default Rate until
repaid and, together with such interest, shall be payable by Debtor to
Secured Party upon demand and shall become part of the Obligations.
However, the risk of accidental loss or damage to, or diminution in value
of, Collateral is on Debtor, and Secured Party shall have no liability
whatever for failure to obtain or maintain insurance, nor to determine
whether any insurance ever in force is adequate as to amount or as to the
risks insured. With respect to Collateral that is in the possession of
Secured Party, Secured Party shall have no duty to fix or preserve Rights
against prior parties to such Collateral and shall never be liable for any
failure to use diligence to collect any amount payable in respect of such
Collateral, but shall be liable only to account to Debtor for what it may
actually collect or receive thereon. The provisions of this subparagraph
are applicable whether or not an Event of Default exists.
(h) Cash Collateral Account. If an Event of Default exists
and is continuing, Secured Party shall have, and Debtor hereby grants to
Secured Party, the Right and authority to transfer all funds on deposit in
the Deposit Accounts to a Cash Collateral Account (herein so called)
maintained with a depository institution acceptable to Secured Party and
subject to the exclusive direction, domain, and control of Secured Party,
and no disbursements or withdrawals shall be permitted to be made by
Debtor from such Cash Collateral Account. Such Cash Collateral Account
shall be subject to the Security Interest and Liens in favor of Secured
Party herein created, and Debtor hereby grants a security interest to
Secured Party on behalf of Lenders in and to, such Cash Collateral Account
and all checks, drafts, and other items ever received by Debtor for
deposit therein. Furthermore, if an Event of Default exists, Secured Party
shall have the Right, at any time in its discretion without notice to
Debtor, (i) to transfer to or to register in the name of Secured Party or
any Lender or nominee any certificates of deposit or deposit instruments
constituting Deposit Accounts and shall have the Right to exchange such
certificates or instruments representing Deposit Accounts for certificates
or instruments of smaller or larger
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denominations and (ii) to take and apply against the Obligations any and
all funds then or thereafter on deposit in the Cash Collateral Account or
otherwise constituting Deposit Accounts.
(i) Power of Attorney. Debtor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of Debtor or in its own name,
to take after the occurrence and during the continuance of an Event of
Default any and all action and to execute any and all documents and
instruments which Secured Party at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Security
Agreement and, without limiting the generality of the foregoing, Debtor
hereby gives Secured Party the power and Right on behalf of Debtor and in
its own name to do any of the following from time to time after the
occurrence and during the continuance of an Event of Default without
notice to or the consent of Debtor:
(i) to transfer any and all funds on deposit in the Deposit
Accounts to the Cash Collateral Account as set forth in herein;
(ii) to receive, endorse, and collect any drafts or other
instruments or documents in connection with clause (b) above and
this clause (i);
(iii) to use the Intellectual Property or to grant or issue any
exclusive (if Debtor has exclusive rights to such Intellectual
Property) or non-exclusive license under the Intellectual Property
to anyone else, and to perform any act necessary for the Secured
Party to assign, pledge, convey, or otherwise transfer title in or
dispose of the Intellectual Property to any other Person;
(iv) to demand, xxx for, collect, or receive, in the name of
Debtor or in its own name, any money or property at any time payable
or receivable on account of or in exchange for any of the Collateral
and, in connection therewith, endorse checks, notes, drafts,
acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any
policy of insurance;
(v) to pay or discharge taxes, Liens, or other encumbrances
levied or placed on or threatened against the Collateral;
(vi) to notify post office authorities to change the address
for delivery of mail to Debtor to an address designated by Secured
Party and to receive, open, and dispose of mail addressed to Debtor;
and
(vii) (A) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment
of any and all monies due and to become due thereunder directly to
Secured Party or as Secured Party shall direct; (B) to receive
payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising
out of any Collateral; (C) to sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse
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receipts, drafts against debtors, assignments, proxies, stock
powers, verifications, and notices in connection with accounts and
other documents relating to the Collateral; (D) to commence and
prosecute any suit, action, or proceeding at Law or in equity in any
court of competent jurisdiction to collect the Collateral or any
part thereof and to enforce any other Right in respect of any
Collateral; (E) to defend any suit, action, or proceeding brought
against Debtor with respect to any Collateral; (F) to settle,
compromise, or adjust any suit, action, or proceeding described
above and, in connection therewith, to give such discharges or
releases as Secured Party may deem appropriate; (G) to exchange any
of the Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent,
registrar, or other designated agency upon such terms as Secured
Party may determine; (H) to add or release any guarantor, endorser,
surety, or other party to any of the Collateral; (I) to renew,
extend, or otherwise change the terms and conditions of any of the
Collateral; (J) to endorse Debtor’s name on all applications,
documents, papers, and instruments necessary or desirable in order
for Secured Party to use or maintain any of the Intellectual
Property; (K) to make, settle, compromise or adjust any claims under
or pertaining to any of the Collateral (including claims under any
policy of insurance); (L) to execute on behalf of Debtor any
financing statements or continuation statements with respect to the
Security Interests created hereby, and to do any and all acts and
things to protect and preserve the Collateral including, without
limitation, the protection and prosecution of all Rights included in
the Collateral; and (M) to sell, transfer, pledge, convey, make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Secured Party were the
absolute owner thereof for all purposes, and to do, at Secured
Parry’s option and Debtor’s expense, at any time, or from time to
time, all acts and things which Secured Party deems necessary to
protect, preserve, maintain, or realize upon the Collateral and
Secured Party’s security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold
the exercise of any of the Rights, powers, privileges, and options
expressly or implicitly granted to Secured Party in this Security
Agreement, and shall not be liable for any failure to do so or any delay
in doing so. Neither Secured Party nor any Person designated by Secured
Party shall be liable for any act or omission or for any error of judgment
or any mistake of fact or Law. This power of attorney is conferred on
Secured Party solely to protect, preserve, maintain, and realize upon its
Security Interest in the Collateral. Secured Party shall not be
responsible for any decline in the value of the Collateral and shall not
be required to take any steps to preserve rights against prior parties or
to protect, preserve, or maintain any Lien given to secure the Collateral.
(j) Purchase Money Collateral. To the extent that Secured
Party or any Lender has advanced or will advance funds to or for the
account of Debtor to enable Debtor to purchase or otherwise acquire Rights
in Collateral, Secured Party or such Lender, at its option, may pay such
funds (i) directly to the Person from whom Debtor will make such purchase
or acquire such Rights, or (ii) to Debtor, in which case Debtor covenants
to promptly pay the same to such
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Person, and forthwith furnish to Secured Party evidence satisfactory to
Secured Party that such payment has been made from the funds so provided.
(k) Subrogation. If any of the Obligations are given in
renewal or extension or applied toward the payment of indebtedness secured
by any Lien, Secured Party shall be, and is hereby, subrogated to all of
the Rights, titles, interests, and Liens securing the indebtedness so
renewed, extended, or paid.
(l) Indemnification. Debtor hereby assumes all liability for
the Collateral, for the Security Interest, and for any use, possession,
maintenance, and management of, all or any of the Collateral including,
without limitation, any Taxes arising as a result of, or in connection
with, the transactions contemplated herein, and agrees to assume liability
for, and to indemnify and hold Secured Party and each Lender harmless from
and against, any and all claims, causes of action, or liability, for
injuries to or deaths of Persons and damage to property, howsoever arising
from or incident to such use, possession, maintenance, and management,
whether such Persons be agents or employees of Debtor or of third parties,
or such damage be to property of Debtor or of others. Debtor agrees to
indemnify, save, and hold Secured Party and each Lender harmless from and
against, and covenants to defend Secured Party and each Lender against,
any and all losses, damages, claims, costs, penalties, liabilities, and
expenses (collectively, “Claims”), including, without limitation, court
costs and attorneys’ fees, and any of the foregoing arising from the
negligence of Secured Party or any Lender, or any of their respective
officers, employees, agents, advisors, employees, or representatives,
howsoever arising or incurred because of, incident to, or with respect to
Collateral or any use, possession, maintenance, or management thereof;
provided however, that the indemnity set forth in this
Paragraph 8(l) will
not apply to Claims caused by the gross negligence or willful misconduct
of Secured Party or any Lender.
9. MISCELLANEOUS.
(a) Continuing Security Interest. This Security Agreement
creates a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the termination of the obligations
of Lenders to make Credit Extensions under the Loan Documents and the
payment in full of the Obligations (other than any contingent indemnity
obligations or, in the case of L/C Obligations, Cash Collateralized) and
compliance with Section 10.01(e) of the Credit Agreement with respect to
Outstanding Swap Contracts secured by any Loan Document; and (ii) inure to
the benefit of and be enforceable by Secured Party, Lenders, and their
respective successors, transferees, and assigns. Without limiting the
generality of the foregoing clause (ii), Secured Party and Lenders may
assign or otherwise transfer any of their respective Rights under this
Security Agreement to any other Person in accordance with the terms and
provisions of Section 10.07 of the Credit Agreement, and to the extent of
such assignment or transfer such Person shall thereupon become vested with
all the Rights and benefits in respect thereof granted herein or otherwise
to Secured Party or Lenders, as the case may be. Upon payment in full of
the Obligations (other than any contingent indemnity obligations or, in
the case of L/C Obligation, Cash Collateralized) and compliance with
Section 10.01(e) of the Credit Agreement with respect to Outstanding Swap
Contracts secured by any Loan Document, Debtor shall be entitled to the
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return, upon its request and at its expense, of such of the Collateral as
shall not have been sold or otherwise applied pursuant to the terms
hereof.
(b) Reference to Miscellaneous Provisions. This Security
Agreement is one of the “Loan Documents” referred to in the Credit
Agreement, and all provisions relating to Loan Documents set forth in
Article X of the Credit Agreement are incorporated herein by reference, the
same as if set forth herein verbatim.
(c) Term: Release of Liens. The Administrative Agent shall
release the Liens created by this Security Agreement in accordance with
Section 10.01 of the Credit Agreement; provided that no Obligor, if any, on
any of the Collateral shall ever be obligated to make inquiry as to the
termination of this Security Agreement, but shall be fully protected in
making payment directly to Secured Party until actual notice of such total
payment of the Obligations is received by such Obligor. At such time as the
Liens created by this Security Agreement are to be released pursuant to this
paragraph, Secured Party shall, at the request and expense of Debtor
following such termination, promptly deliver to Debtor any Collateral held
by the Secured Party hereunder, and promptly execute and deliver to such
Debtor such documents and instruments as Debtor shall reasonably request to
evidence such termination and release as provided in the Credit Agreement.
In addition, if any of the Collateral shall be sold, transferred, assigned
or otherwise disposed of by Debtor in a transaction permitted by the Credit
Agreement, then the Secured Party, at the request and expense of Debtor,
shall promptly execute and deliver releases as provided in the Credit
Agreement.
(d) Actions Not Releases. The Security Interest and Debtor’s
obligations and Secured Party’s Rights hereunder shall not be released,
diminished, impaired, or adversely affected by the occurrence of any one or
more of the following events: (i) the taking or accepting of any other
security or assurance for any or all of the Obligations; (ii) any release,
surrender, exchange, subordination, or loss of any security or assurance at
any time existing in connection with any or all of the Obligations; (iii)
the modification of, amendment to, or waiver of compliance with any terms of
any of the other Loan Documents without the notification or consent of
Debtor, except as required therein (the Right to such notification or
consent being herein specifically waived by Debtor); (iv) the insolvency,
bankruptcy, or lack of corporate or trust power of any party at any time
liable for the payment of any or all of the Obligations, whether now
existing or hereafter occurring; (v) any renewal, extension, or
rearrangement of the payment of any or all of the Obligations, either with
or without notice to or consent of debtor, or any adjustment, indulgence,
forbearance, or compromise that may be granted or given by Secured Party or
any Lender to Debtor; (vi) any neglect, delay, omission, failure, or refusal
of Secured Party or any Lender to take or prosecute any action in connection
with any other agreement, document, guaranty, or instrument evidencing,
securing, or assuring the payment of all or any of the Obligations; (vii)
any failure of Secured Party or any Lender to notify Debtor of any renewal,
extension, or assignment of the Obligations or any part thereof, or the
release of any Collateral or other security, or of any other action taken or
refrained from being taken by Secured Party or any Lender against Debtor or
any new agreement between or among Secured Party or one or more Lenders and
Debtor, it being understood that except as expressly provided herein,
neither Secured Party nor any Lender shall be required to give Debtor any
notice of any kind under any
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circumstances whatsoever with respect to or in connection with the
Obligations including, without limitation, notice of acceptance of this
Security Agreement or any Collateral ever delivered to or for the account
of Secured Party hereunder; (viii) the illegality, invalidity, or
unenforceability of all or any part of the Obligations against any party
obligated with respect thereto by reason of the fact that the Obligations,
or the interest paid or payable with respect thereto, exceeds the amount
permitted by Law, the act of creating the Obligations, or any part
thereof, is ultra xxxxx, or the officers, partners, or trustees creating
same acted in excess of their authority, or for any other reason; or (ix)
if any payment by any party obligated with respect thereto is held to
constitute a preference under applicable Laws or for any other reason
Secured Party or any Lender is required to refund such payment or pay the
amount thereof to someone else.
(e) Waivers. Except to the extent expressly otherwise provided
herein or in other Loan Documents and to the fullest extent permitted by
applicable Law, Debtor waives (i) any Right to require Secured Party or any
Lender to proceed against any other Person, to exhaust its Rights in
Collateral, or to pursue any other Right which Secured Party or any Lender
may have; (ii) with respect to the Obligations, presentment and demand for
payment, protest, notice of protest and nonpayment, and notice of the
intention to accelerate; and (iii) all Rights of marshaling in respect of
any and all of the Collateral.
(f)
Financing Statement; Authorization. Secured Party shall be
entitled at any time to file this Security Agreement or a carbon,
photographic, or other reproduction of this Security Agreement, as a
financing statement, but the failure of Secured Party to do so shall not
impair the validity or enforceability of this Security Agreement. Debtor
hereby irrevocably authorizes Secured Party at any time and from time to
time to file in any UCC jurisdiction any initial or other financing
statements and amendments thereto that (i) indicate the Collateral (A) as
“all assets of Debtor” or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of the state or such jurisdiction or whether such
assets are included in the Collateral hereunder, or (B) as being of an equal
or lesser scope or with greater detail, and (ii) contain any other
information required by Article 9 of the UCC of the state or such
jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment, including (A) whether Debtor is an
organization, the type of organization, and any organization identification
number issued to Debtor and, (B) in the case of a financing statement filed
as a fixture filing or indicating Collateral that is as-extracted collateral
or timber to be cut, a sufficient description of real property to which the
Collateral relates. Debtor agrees to furnish any such information to Secured
Party promptly upon request.
(g) Amendments. This Security Agreement may be amended only by
an instrument in writing executed jointly by Debtor and Secured Party, and
supplemented only by documents delivered or to be delivered in accordance
with the express terms hereof.
(h) Multiple Counterparts. This Security Agreement has been
executed in a number of identical counterparts, each of which shall be
deemed an original for all purposes and all of which constitute,
collectively, one agreement; but, in making proof of this Security
Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
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(i)
Parties Bound; Assignment. This Security Agreement shall
be binding on Debtor and Debtor’s legal representatives, successors, and
assigns and shall inure to the benefit of Secured Party and Secured
Party’s successors and assigns.
(i) Secured Party is the agent for each Lender under the Credit
Agreement and each Affiliate of a Lender party to any Lender Hedging
Agreement, the Security Interest and all Rights granted to Secured
Party hereunder or in connection herewith are for the ratable
benefit of each Lender and each such Affiliate, and Secured Party
may, without the joinder of any Lender or any such Affiliate,
exercise any and all Rights in favor of Secured Party or Lenders or
any such Affiliates hereunder, including, without limitation,
conducting any foreclosure sales hereunder, and executing full or
partial releases hereof, amendments or modifications hereto, or
consents or waivers hereunder. The Rights of each Lender or any such
Affiliate vis-à-vis Secured Party and each other Lender or any such
Affiliate may be subject to one or more separate agreements between
or among such parties, but Debtor need not inquire about any such
agreement or be subject to any terms thereof unless Debtor
specifically joins therein; and consequently, neither Debtor nor
Debtor’s legal representatives, successors, and assigns shall be
entitled to any benefits or provisions of any such separate
agreements or be entitled to rely upon or raise as a defense, in any
manner whatsoever, the failure or refusal of any party thereto to
comply with the provisions thereof.
(ii) Debtor may not, without the prior written consent of
Secured Party, assign any Rights, duties, or obligations hereunder.
(j) Governing Law. The substantive laws of the State
of New York, except to the extent the laws of another jurisdiction
govern the creation, perfection, validity, or enforcement of liens
under this Security Agreement, and the applicable federal laws of the
United States, shall govern the validity, construction, enforcement and
interpretation of this security agreement and all of the other loan
documents.
(k) The provisions of Section 10.10 of the Credit Agreement are
incorporated herein as if set forth herein.
(l) All notices given pursuant hereto shall be given in the manner
set forth in the Credit Agreement, if to Secured Party, to the address of
Secured Party therein set forth and if to Debtor, to the following
address:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Telephone: (000) 000-0000
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THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN 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.
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IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be duly
executed and delivered by an officer duly authorized as of the date first above
written.
QUEST ENERGY SERVICE, LLC, a Kansas limited liability company |
||||
By: | /s/ Xxxxx X. Xxxx | |||
Xxxxx X. Xxxx, Chief Executive Officer and | ||||
President | ||||
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ANNEX A TO SECURITY AGREEMENT
DEBTOR INFORMATION AND LOCATION OF COLLATERAL
A. | Exact Legal Name of Debtor: Quest Energy Service, LLC. | |
B. | Mailing Address of Debtor: 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxxxx 00000. | |
C. | Type of Entity: limited liability company. | |
D. | Jurisdiction of Organization: Kansas. | |
E. | State Issued Organizational Identification Number: 4009940. | |
F. | Tax ID Number: 00-0000000. | |
G. | Location of Books and Records: 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxxxx 00000. | |
H. | Location of Collateral: 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxxxx 00000 | |
I. | Location of Real Property: None. | |
J. | Jurisdiction(s) for Filing Financing Statements: Kansas. | |
K. | Fixture filings in the relevant counties in which the properties are located: None. |
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ANNEX
B-1 TO SECURITY AGREEMENT
COLLATERAL DESCRIPTIONS
A. | Collateral Notes and Collateral Note Security: None | |
B. | Pledged Shares: None. | |
C. | Partnership/Limited Liability Company Interests: None. | |
D. | Agreements: None. | |
E. | Commercial Tort Claims: None | |
F. | Deposit Accounts (including name of bank, address and account number): |
• | Account #630373751 at JPMorgan Chase. | ||
• | Account #630373744 at JPMorgan Chase. | ||
• | Account #737308163 at JPMorgan Chase. |
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ANNEX B-2 TO SECURITY AGREEMENT
INTELLECTUAL PROPERTY
1. | Registered Copyrights and Copyright Applications: None | |
2. | Issued Patents and Patent Applications: None | |
3. | Registered Trademarks and Trademark Applications: None |
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ANNEX C TO SECURITY AGREEMENT
DEPOSIT ACCOUNT CONTROL AGREEMENT
,
20___
Ladies and Gentlemen:
This letter is to notify you (the “Depository Bank”) that, pursuant to that certain Pledge and Security
Agreement dated as of
, 200___ (as amended, modified, supplemented, or restated from time to
time, the “Security Agreement”), , a company organized under the laws of
(the “Pledgor”), has granted to Royal Bank of Canada as Administrative Agent and
Collateral Agent (“Pledgee”) a first priority security interest in and lien upon, (a)
Account No. (the “Account”) maintained by Pledgor with you, (b) any extensions or renewals of the
Account if the Account is one which may be extended or renewed, and (c) all of
Pledgor’s right, title, and interest (whether now existing or hereafter created
or arising) in and to the Account, all sums from time to time on deposit therein,
credited thereto, or payable thereon, all instruments, documents, certificates,
and other writings evidencing the Account, and any and all proceeds of any
thereof (the items described in clauses (a), (b) and (c) being herein
collectively called the “Collateral”),
In connection therewith, the parties hereto agree (which agreement by Pledgor
will be construed as instructions to the Depository Bank):
1. | The Depository Bank is instructed to register the pledge on its books and hold the Collateral in a pledged status account. | |
2. | The Depository Bank is instructed to deliver to Pledgee copies of monthly statements on the account(s) identified below: | |
3. | The Account will be styled: | |
4. | All dividends, interest, gains, and other profits on the Collateral will be reported in the name and tax identification number of Pledgor. | |
5. | If so notified by Pledgee, the Depository Bank will not, without the prior written consent of Pledgee, allow any of the Collateral or any interest therein to be sold, transferred, or withdrawn by or for the benefit of Pledgor. | |
6. | This letter agreement gives Pledgee “control” of the Account and the Collateral. The Depository Bank agrees to comply with any order or instruction from Pledgee as to the withdrawal or disposition of any funds from time to time credited to the Account, or as to any other matters relating to the Collateral, without the further consent of Pledgor. The Depository Bank shall be |
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fully entitled to rely upon such instructions from Pledgee even if such instructions are contrary to any instructions or demands that Pledgor may give to the Depository Bank. | ||
7. | Pledgee agrees to indemnify and hold the Depository Bank, its officers and employees, harmless from and against any and all claims, causes of action, liabilities, lawsuits, demands, and/or damages, including, without limitation any and all costs, including court costs and reasonable attorneys’ fees, that may arise or result from the Depository Bank complying with the instructions and orders of Pledgee given in connection with Pledgee’s exercise of its control over and secured rights in the Account and the Collateral except to the extent that such claims, causes of action, liabilities, lawsuits, demands, and/or damages are found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Depository Bank. | |
8. | Pledgor agrees to indemnify and hold the Depository Bank, its officers and employees, harmless from and against any and all claims, causes of action, liabilities, lawsuits, demands, and/or damages, including, without limitation, any and all costs, including court costs and reasonable attorneys’ fees, that may arise or result from the Depository Bank entering into and performing its obligations under this letter agreement except to the extent that such claims, causes of action, liabilities, lawsuits, demands, and/or damages are found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Depository Bank. | |
9. | The Depository Bank represents that it has not received notice regarding any lien, encumbrance, or other claim to the Account or the Collateral from any person other than pursuant to this letter agreement and has not entered into another agreement with any other party to act on such party’s instructions with respect to the Account. The Depository Bank further agrees not to enter into any such agreement with any other party. | |
10. | The Depository Bank subordinates’ to the security interest of Pledgee any right of recoupment or set-off, or to assert any security interest or other lien, that it may at any time have against or in any of the Collateral on account of any credit or other obligations owed to the Depository Bank by Pledgor or any other person. The Depository Bank may, however, from time to time debit the Account for any of its customary charges in maintaining the Account or for reimbursement for the reversal of any provisional credits granted by the Depository Bank to the Account, to the extent, in each case, that Pledgor has not separately paid or reimbursed Depository Bank therefor. | |
11. | To the extent a conflict exists between the terms of this letter agreement and any account agreement between Pledgor and the Depository Bank, the terms of this letter agreement will control. | |
12. | The terms of this letter agreement will in no way be modified except by a writing signed by all parties hereto. | |
13. | Each of the parties executing this letter agreement represents that he has the proper authority to execute this letter agreement. |
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IN WITNESS WHEREOF, Pledgor and Pledgee have agreed to the terms of this
letter agreement as of the date first indicated above.
Pledgor: | ||||||||
[NAME OF ENTITY] | ||||||||
By: |
||||||||
Name: | ||||||||
Title: | ||||||||
Pledgee: | ||||||||
ROYAL BANK OF CANADA, | ||||||||
as Administrative Agent | ||||||||
By: |
||||||||
Name: | ||||||||
Title: | ||||||||
Acknowledged and Agreed on , 200_: | ||||||||
Depository Bank: | ||||||||
[NAME OF ENTITY] | ||||||||
By: |
||||||||
Name: | ||||||||
Title: | ||||||||
QES Pledge and
Security Agreement
Security Agreement
Annex C
- Page 3
ANNEX D TO SECURITY AGREEMENT
ACKNOWLEDGMENT OF PLEDGE
PARTNERSHIP/LIMITED LIABILITY COMPANY:
INTEREST OWNER:
INTEREST OWNER:
BY THIS ACKNOWLEDGMENT OF PLEDGE, dated as of , 200_,
(the “Partnership/Limited Liability Company”) hereby
acknowledges the pledge in favor of Royal Bank of Canada
(“Pledgee”), in its capacity as
Administrative Agent and Collateral Agent for certain Lenders and as Secured Party under that
certain Pledge and Security Agreement dated as of
, 200___ (as amended, modified,
supplemented, or restated from time to time, the “Security Agreement”), against, and a security
interest in favor of Pledgee in, all of ’s (the “Interest Owner”)
Rights in connection with any partnership interest in the Partnership/Limited Liability Company now
and hereafter owned by the Interest Owner (“Partnership/Limited Liability Company Interest”).
A. Pledge Records. The Partnership/Limited Liability Company has identified Pledgee’s
interest in all of the Interest Owner’s Right, title, and interest in and to all of the Interest
Owner’s Partnership/Limited Liability Company Interest as subject to a pledge and security interest
in favor of Pledgee in the Partnership/Limited Liability Company records.
B. Partnership/Limited
Liability Company Distributions, Accounts, and
Correspondence. The Partnership/Limited Liability Company hereby acknowledges that (i) all
proceeds, distributions, and other amounts payable to the Interest Owner, including, without
limitation, upon the termination, liquidation, and dissolution of the Partnership/Limited Liability
Company shall be paid and remitted to the Pledgee upon demand, (ii) all funds in deposit accounts
shall be held for the benefit of Pledgee, and (iii) all future correspondence, accountings of
distributions, and tax returns of the Partnership/Limited Liability Company shall be provided to
the Pledgee. The Partnership/Limited Liability Company acknowledges and accepts such direction and
hereby agrees that it shall, upon the written demand by the Administrative Agent, pay directly to
the Administrative Agent at its offices at Xxxxx Xxxx Xxxxx, X.X. Xxx
00, 200 Bay Street,
00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 any and all distributions, income, and
cash flow arising from the Partnership/Limited Liability Company Interests whether payable in cash,
property or otherwise, subject to and in accordance with the terms and conditions of the
Partnership/Limited Liability Company Agreement. The Pledgee may from time to time notify the
Partnership/Limited Liability Company of any change of address to which such amounts are to be
paid.
Remainder of Page Intentionally Blank.
Signature Page to Follow.
Signature Page to Follow.
Annex D - Page 1
EXECUTED as of the date first stated in this Acknowledgment of Pledge.
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
[PARTNERSHIP/LIMITED LIABILITY COMPANY] | ||||||||
By: | ||||||||
as [General Partner] [Manager] | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Annex D
- Page 2