SECURITY AGREEMENT
Exhibit
10.4
THIS
SECURITY AGREEMENT
("Agreement")
is
made as of the 20th
day of
February, 2007, by ______________________, a ___________ (hereinafter
called "Debtor",
whether one or more), in favor of AMEGY BANK NATIONAL ASSOCIATION, a national
banking association ("Bank").
Debtor hereby agrees with Bank as follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the meanings indicated
below:
(a) The
term
"Borrower"
shall
mean Debtor and the other Borrowers (as defined in the Loan Agreement), or
any
of them.
(b) The
term
"Code"
shall
mean the Uniform Commercial Code as in effect in the State of Texas on the
date
of this Agreement or as it may hereafter be amended from time to
time.
(c) The
term
"Collateral"
shall
mean all of the property set forth below, including without limitation, any
property specifically described on Schedule
"A"
attached
hereto and made a part hereof:
(i) All
present and future accounts, chattel paper (including electronic and tangible),
contract rights, documents, instruments, deposit accounts, commercial tort
claims, health care insurance receivables, and general intangibles (including
payment intangibles and other any right to payment for goods sold or services
rendered arising out of the sale or delivery of personal property or work done
or labor performed by Debtor), now or hereafter owned, held, or acquired by
Debtor, together with any and all books of account, customer lists and other
records relating in any way to the foregoing (including, without limitation,
computer software, whether on tape, disk, card, strip, cartridge or any other
form), and in any case where an account arises from the sale of goods, the
interest of Debtor in such goods.
(ii) All
present and hereafter acquired inventory (including without limitation, all
raw
materials, work in process and finished goods) held, possessed, owned, held
on
consignment, or held for sale, lease, return or to be furnished under contracts
of services, in whole or in part, by Debtor wherever located, all records
relating in any way to the foregoing (including, without limitation, any
computer software, whether on tape, disk, card, strip, cartridge or any other
form).
The
term
Collateral, as used herein, shall also include all PRODUCTS and PROCEEDS of
all
of the foregoing (including without limitation, insurance payable by reason
of
loss or damage to the foregoing property) and any property, securities,
guaranties or monies of Debtor which may at any time come into the possession
of
Secured Party (as hereinafter defined). The designation of proceeds does not
authorize Debtor to sell, transfer or otherwise convey any of the foregoing
property except finished goods intended for sale in the ordinary course of
Debtor's business or as otherwise provided herein.
(d) The
term
"Indebtedness"
shall
mean (i) that certain Promissory Note (Revolving) dated of even date herewith
executed by Borrowers, in the face amount of Two Million and No/100 Dollars
($2,000,000.00), being payable to the order of Bank, and any and all renewals,
extensions and modifications of said Revolving Note or any part thereof (said
Note and all renewals, extensions and modifications thereof herein collectively
called “Revolving Note”), (ii) that certain Promissory Note (Term) dated of even
date herewith executed by Borrower in the face amount of Two Million Two Hundred
Thousand and No/100 Dollars ($2,200,000.00), being payable to the order of
Bank,
and any and all renewals, extensions and modifications of said Term Note or
any
part thereof (said Term Note and all renewals, extensions and modifications
thereof herein collectively called “Term Note”), and (iii) Borrower further
agrees that this Security Agreement shall secure, in addition to the
indebtedness and/or obligations described herein, to secure the payment and
performance of all other indebtednesses and obligations of whatever kind and
character (except solely any indebtedness which is prohibited from being secured
hereby under any applicable law of the State of Texas or the United States
of
America), owing or which may hereafter become owing or to be performed by any
one or more of the Borrowers or Obligated Party to Bank whether such
indebtednesses or obligations are evidenced by a note, open account, overdraft,
endorsement, surety agreement, guaranty agreement, or otherwise, and whether
such indebtednesses or obligations are present or future, direct or indirect,
primary or secondary, joint or several, fixed or contingent or otherwise,
whether such indebtednesses or obligations were originally owed to Bank or
to be
performed for Bank or owed to or to be performed for others and acquired by
purchase or otherwise by any Bank, and whether or not such indebtedness or
obligations were created by any then owner of any interest in or to any of
the
Collateral, it being contemplated that one or more of the present or future
Borrowers or Obligated Party may now or hereafter be or become indebted or
obligated to Bank in further sum or sums; and Borrower further agrees that
if
any default ever occurs under any instrument, document or other writing
whatsoever now or hereafter evidencing or securing any indebtedness now or
hereafter secured by this Security Agreement, then, in any such event, Bank
may,
at its option, (without demand, notice of any such default or event, notice
of
intent to accelerate maturity, notice of acceleration of maturity, presentment
for payment or acceleration or any other act or notice whatsoever), declare
immediately due and payable any and all indebtednesses then secured hereby.
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(e) The
term
"Loan
Agreement"
shall
mean that certain Loan Agreement of even date herewith by and between Bank,
Debtor and the other Borrowers named therein, as the same may be amended or
modified.
(f) The
term
"Loan
Documents"
shall
mean all instruments and documents evidencing, securing, governing, guaranteeing
and/or pertaining to the Indebtedness.
(g) The
term
"Obligated
Party"
shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the Indebtedness.
(h) The
term
"Secured
Party"
shall
mean Bank, its successors and assigns, including without limitation, any party
to whom Bank, or its successors or assigns, may assign its rights and interests
under this Agreement.
All
words
and phrases used herein which are expressly defined in Section 1.201 or Chapter
9 of the Code shall have the meaning provided for therein. Other words and
phrases defined elsewhere in the Code shall have the meaning specified therein
except to the extent such meaning is inconsistent with a definition in Section
1.201 or Chapter 9 of the Code.
2. Security
Interest.
As
security for the Indebtedness, Debtor, for value received, hereby grants to
Secured Party a continuing security interest in the Collateral.
3. Representations
and Warranties.
Debtor
hereby represents and warrants the following to Secured Party:
(a) Due
Authorization.
The
execution, delivery and performance of this Agreement and all of the other
Loan
Documents by Debtor have been duly authorized by all necessary corporate action
of Debtor, to the extent Debtor is a corporation, or by all necessary
partnership action, to the extent Debtor is a partnership.
(b) Enforceability.
This
Agreement and the other Loan Documents constitute legal, valid and binding
obligations of Debtor, enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except to
the
extent specific remedies may generally be limited by equitable
principles.
(c) Ownership
and Liens.
Debtor
has good and indefeasible title to the Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the security
interest created by this Agreement and Liens permitted under Section 9.02 of
the
Loan Agreement. No dispute, right of setoff, counterclaim or defense exists
with
respect to all or any part of the Collateral. Debtor has not executed any other
security agreement currently affecting the Collateral and no effective financing
statement or other instrument similar in effect covering all or any part of
the
Collateral is on file in any recording office except as may have been executed
or filed in favor of Secured Party and as will be terminated upon closing and
funding of the Indebtedness under the Loan Agreement.
(d) No
Conflicts or Consents.
Neither
the ownership, the intended use of the Collateral by Debtor, the grant of the
security interest by Debtor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i) conflict with any provision
of (A) any domestic or foreign law, statute, rule or regulation, (B) the
articles or certificate of incorporation, charter, bylaws or partnership
agreement, as the case may be, of Debtor, or (C) any agreement, judgment,
license, order or permit applicable to or binding upon Debtor, or (ii) result
in
or require the creation of any lien, charge or encumbrance upon any assets
or
properties of Debtor or of any person except as may be expressly contemplated
in
the Loan Documents. Except as expressly contemplated in the Loan Documents,
no
consent, approval, authorization or order of, and no notice to or filing with,
any court, governmental authority or third party is required in connection
with
the grant by Debtor of the security interest herein or the exercise by Secured
Party of its rights and remedies hereunder.
(e) Security
Interest.
Debtor
has and will have at all times full right, power and authority to grant a
security interest in the Collateral to Secured Party in the manner provided
herein, free and clear of any lien, security interest or other charge or
encumbrance. This Agreement creates a legal, valid and binding security interest
in favor of Secured Party in the Collateral securing the Indebtedness.
Possession by Secured Party of all certificates, instruments and cash
constituting Collateral from time to time and/or the filing of the financing
statements delivered prior hereto and/or concurrently herewith by Debtor to
Secured Party will perfect and establish the first priority of Secured Party's
security interest hereunder in the Collateral.
(f) Location.
Debtor's residence or chief executive office, as the case may be, and the office
where the records concerning the Collateral are kept is located at its address
set forth on the signature page hereof. Except as specified elsewhere herein,
all Collateral shall be kept at such address and such other addresses as may
be
listed in Schedule
"B"
attached
hereto and made a part hereof.
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(g) Solvency
of Debtor.
As of
the date hereof, and after giving effect to this Agreement and the completion
of
all other transactions contemplated by Debtor at the time of the execution
of
this Agreement, (i) Debtor is and will be solvent, (ii) the fair saleable value
of Debtor's assets exceeds and will continue to exceed Debtor's liabilities
(both fixed and contingent), (iii) Debtor is and will continue to be able to
pay
its debts as they mature, and (iv) if Debtor is not an individual, Debtor has
and will have sufficient capital to carry on Debtor's businesses and all
businesses in which Debtor is about to engage.
(h) Compliance
with Environmental Laws.
Except
as disclosed in writing to Secured Party: (i) Debtor is conducting Debtor's
businesses in material compliance with all applicable federal, state and local
laws, statutes, ordinances, rules, regulations, orders, determinations and
court
decisions, including without limitation, those pertaining to health or
environmental matters such as the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (collectively, together with any subsequent
amendments, hereinafter called "CERCLA"),
the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and
the
Hazardous Substance Waste Amendments of 1984 (collectively, together with any
subsequent amendments, hereinafter called "RCRA"),
the
Texas Water Code and the Texas Solid Waste Disposal Act; (ii) none of the
operations of Debtor is the subject of a federal, state or local investigation
evaluating whether any material remedial action is needed to respond to a
release or disposal of any toxic or hazardous substance or solid waste into
the
environment; (iii) Debtor has not filed any notice under any federal, state
or
local law indicating that Debtor is responsible for the release into the
environment, the disposal on any premises in which Debtor is conducting its
businesses or the improper storage, of any material amount of any toxic or
hazardous substance or solid waste or that any such toxic or hazardous substance
or solid waste has been released, disposed of or is improperly stored, upon
any
premise on which Debtor is conducting its businesses; and (iv) Debtor otherwise
does not have any known material contingent liability in connection with the
release into the environment, disposal or the improper storage, of any such
toxic or hazardous substance or solid waste. The terms "hazardous
substance"
and
"release",
as
used herein, shall have the meanings specified in CERCLA, and the terms
"solid
waste"
and
"disposal",
as
used herein, shall have the meanings specified in RCRA; provided, however,
that
to the extent that the laws of the State of Texas establish meanings for such
terms which are broader than that specified in either CERCLA or RCRA, such
broader meanings shall apply.
(i) Inventory.
The
security interest in the inventory shall continue through all stages of
manufacture and shall, without further action, attach to the accounts or other
proceeds resulting from the sale or other disposition thereof and to all such
inventory as may be returned to Debtor by its account debtors.
(j) Accounts.
Each
account represents the valid and legally binding indebtedness of a bona fide
account debtor arising from the sale or lease by Debtor of goods or the
rendition by Debtor of services and is not subject to contra accounts, setoffs,
defenses or counterclaims by or available to account debtors obligated on the
accounts except as disclosed by Debtor to Secured Party from time to time in
writing. The amount shown as to each account on Debtor's books is the true
and
undisputed amount owing and unpaid thereon, subject only to discounts,
allowances, rebates, credits and adjustments to which the account debtor has
a
right and which have been disclosed to Secured Party in writing.
4. Affirmative
Covenants.
Debtor
will comply with the covenants contained in this Section 4 at all times during
the period of time this Agreement is effective unless Secured Party shall
otherwise consent in writing.
(a) Ownership
and Liens.
Debtor
will maintain good and indefeasible title to all Collateral free and clear
of
all liens, security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement and the security interests and
other
encumbrances expressly permitted by the other Loan Documents. Debtor will not
permit any dispute, right of setoff, counterclaim or defense to exist with
respect to all or any part of the Collateral. Debtor will cause any financing
statement or other security instrument with respect to the Collateral to be
terminated, except as may exist or as may have been filed in favor of Secured
Party. Debtor will defend at its expense Secured Party's right, title and
security interest in and to the Collateral against the claims of any third
party.
(b) Further
Assurances.
Debtor
will from time to time at its expense promptly execute and deliver all further
instruments and documents and take all further action necessary or appropriate
or that Secured Party may reasonably request in order (i) to perfect and protect
the security interest created or purported to be created hereby and the first
priority of such security interest, (ii) to enable Secured Party to exercise
and
enforce its rights and remedies hereunder in respect of the Collateral, and
(iii) to otherwise effect the purposes of this Agreement, including without
limitation: (A) executing and filing such financing or continuation statements,
or amendments thereto; and (B) furnishing to Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and
such other reports in connection with the Collateral, all in reasonable detail
satisfactory to Bank.
(c) Inspection
of Collateral.
Debtor
will keep adequate records concerning the Collateral and will permit Secured
Party and all representatives and agents appointed by Secured Party to inspect
any of the Collateral and the books and records of or relating to the Collateral
at any time during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any such
information. Unless an Event of Default has occurred and is continuing, Secured
Party shall give Debtor two (2) business days notice of any such inspection
and
no more than two (2) such inspections shall be made in any calendar
year.
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(d) Payment
of Taxes.
Debtor
(i) will timely pay all property and other taxes, assessments and governmental
charges or levies imposed upon the Collateral or any part thereof, (ii) will
timely pay all lawful claims which, if unpaid, might become a lien or charge
upon the Collateral or any part thereof, and (iii) will maintain appropriate
accruals and reserves for all such liabilities in a timely fashion in accordance
with generally accepted accounting principles. Debtor may, however, delay paying
or discharging any such taxes, assessments, charges, claims or liabilities
so
long as the validity thereof is contested in good faith by proper proceedings
and provided Debtor has set aside on Debtor's books adequate reserves therefor;
provided, however, Debtor understands and agrees that in the event of any such
delay in payment or discharge and upon Secured Party's written request, Debtor
will establish with Secured Party an escrow acceptable to Secured Party adequate
to cover the payment of such taxes, assessments and governmental charges with
interest, costs and penalties and a reasonable additional sum to cover possible
costs, interest and penalties (which escrow shall be returned to Debtor upon
payment of such taxes, assessments, governmental charges, interests, costs
and
penalties or disbursed in accordance with the resolution of the contest to
the
claimant) or furnish Secured Party with an indemnity bond secured by a deposit
in cash or other security acceptable to Secured Party. Notwithstanding any
other
provision contained in this Subsection, Secured Party may at its discretion
exercise its rights under Subsection 6(c) at any time to pay such taxes,
assessments, governmental charges, interest, costs and penalties.
(e) Mortgagee's
and Landlord's Waivers.
As
provided for in the Loan Agreement, Debtor shall cause each mortgagee of real
property owned by Debtor and each landlord of real property leased by Debtor
to
execute and deliver agreements satisfactory in form and substance to Secured
Party by which such mortgagee or landlord waives or subordinates any rights
it
may have in the Collateral.
(f) Condition
of Goods.
Debtor
will maintain, preserve, protect and keep all Collateral which constitutes
goods
in good condition, repair and working order and will cause such Collateral
to be
used and operated in good and workmanlike manner, in accordance with applicable
laws and in a manner which will not make void or cancelable any insurance with
respect to such Collateral. Debtor will promptly make or cause to be made all
repairs, replacements and other improvements to or in connection with the
Collateral which Secured Party may request from time to time.
(g) Insurance.
Debtor
will, at its own expense, maintain insurance with respect to all Collateral
which constitutes goods in such amounts, against such risks, in such form and
with such insurers, as shall be reasonably satisfactory to Secured Party from
time to time. If reasonably requested by Secured Party in writing, each policy
for property damage insurance shall provide for all losses to be paid directly
to Secured Party. If reasonably requested by Secured Party in writing, each
policy of insurance maintained by Debtor shall (i) name Debtor and Secured
Party
as insured parties thereunder (without any representation or warranty by or
obligation upon Secured Party) as their interests may appear, (ii) contain
the
agreement by the insurer that any loss thereunder shall be payable to Secured
Party notwithstanding any action, inaction or breach of representation or
warranty by Debtor, (iii) provide that there shall be no recourse against
Secured Party for payment of premiums or other amounts with respect thereto,
and
(iv) provide that at least thirty (30) days prior written notice of cancellation
or of lapse shall be given to Secured Party by the insurer. Debtor will, if
requested by Secured Party, deliver to Secured Party original or duplicate
policies of such insurance and, as often as Secured Party may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Debtor will also, at the written request of Secured Party, duly
execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such assignment. All
insurance payments in respect of loss of or damage to any Collateral shall
be
paid to Secured Party and applied as Secured Party in its sole discretion deems
appropriate.
(h) Accounts
and General Intangibles.
Debtor
will, except as otherwise provided in Subsection 6(f), collect, at Debtor's
own
expense, all amounts due or to become due under each of the accounts and general
intangibles. In connection with such collections, Debtor may and, at Secured
Party's direction, will take such action not otherwise forbidden by Subsection
5(e) as Debtor or Secured Party may deem necessary or advisable to enforce
collection or performance of each of the accounts and general intangibles.
Debtor will also duly perform and cause to be performed all of its obligations
with respect to the goods or services, the sale or lease or rendition of which
gave rise or will give rise to each account and all of its obligations to be
performed under or with respect to the general intangibles. Debtor also
covenants and agrees to take any action and/or execute any documents that
Secured Party may request in order to comply with the Federal Assignment of
Claims Act, as amended.
5. Negative
Covenants.
Debtor
will comply with the covenants contained in this Section 5 at all times during
the period of time this Agreement is effective, unless Secured Party shall
otherwise consent in writing.
(a) Transfer
or Encumbrance.
Debtor
will not (i) sell, assign (by operation of law or otherwise), transfer,
exchange, lease or otherwise dispose of any of the Collateral, (ii) xxxxx x
xxxx
or security interest in or execute, file or record any financing statement
or
other security instrument with respect to the Collateral to any party other
than
Secured Party, or (iii) deliver actual or constructive possession of any of
the
Collateral to any party other than Secured Party, except for (A) sales and
leases of inventory in the ordinary course of business, and (B) the sale or
other disposal of any item of equipment which is worn out or obsolete and which
has been replaced by an item of equal suitability and value, owned by Debtor
and
made subject to the security interest under this Agreement, but which is
otherwise free and clear of any lien, security interest, encumbrance or adverse
claim; provided, however, the exceptions permitted in clauses (A) and (B) above
shall automatically terminate upon the occurrence of an Event of
Default.
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(b) Impairment
of Security Interest.
Debtor
will not take or fail to take any action which would in any manner impair the
enforceability of Secured Party's security interest in any
Collateral.
(c) Possession
of Collateral.
Debtor
will not cause or permit the removal of any Collateral from its possession,
control and risk of loss, nor will Debtor cause or permit the removal of any
Collateral from the address on the signature page hereof and the addresses
specified on Schedule
"B"
to this
Agreement (or in transit from and to any such locations) other than (i) as
permitted by Subsection 5(a), or (ii) in connection with the possession of
any
Collateral by Secured Party or by its bailee.
(d) Goods.
Debtor
will not permit any Collateral which constitutes goods to at any time (i) be
covered by any document except documents in the possession of the Secured Party,
(ii) become so related to, attached to or used in connection with any particular
real property so as to become a fixture upon such real property, or (iii) be
installed in or affixed to other goods so as to become an accession to such
other goods unless such other goods are subject to a perfected first priority
security interest under this Agreement.
(e) Compromise
of Collateral.
Debtor
will not adjust, settle, compromise, amend or modify any Collateral, except
an
adjustment, settlement, compromise, amendment or modification in good faith
and
in the ordinary course of business; provided, however, this exception shall
automatically terminate upon the occurrence and during the continuance of an
Event of Default at Secured Party's written request. Debtor shall provide to
Secured Party such information concerning (i) any adjustment, settlement,
compromise, amendment or modification of any Collateral, and (ii) any claim
asserted by any account debtor for credit, allowance, adjustment, dispute,
setoff or counterclaim, as Secured Party may request from time to
time.
(f) Financing
Statement Filings.
Debtor
recognizes that financing statements pertaining to the Collateral have been
or
may be filed where Debtor maintains any Collateral, has its records concerning
any Collateral or has its residence or chief executive office, as the case
may
be. Without limitation of any other covenant herein, Debtor will not cause
or
permit any change in the location of (i) any Collateral, (ii) any records
concerning any Collateral, or (iii) Debtor's residence or chief executive
office, as the case may be, to a jurisdiction other than as represented in
Subsection 3(f) unless Debtor shall have notified Secured Party in writing
of
such change at least thirty (30) days prior to the effective date of such
change, and shall have first taken all action required by Secured Party for
the
purpose of further perfecting or protecting the security interest in favor
of
Secured Party in the Collateral. In any written notice furnished pursuant to
this Subsection, Debtor will expressly state that the notice is required by
this
Agreement and contains facts that may require additional filings of financing
statements or other notices for the purpose of continuing perfection of Secured
Party's security interest in the Collateral.
6. Rights
of Secured Party.
Secured
Party shall have the rights contained in this Section 6 at all times during
the
period of time this Agreement is effective.
(a) Additional
Financing Statements Filings.
Debtor
hereby authorizes Secured Party to file, without the signature of Debtor, one
or
more financing or continuation statements, and amendments thereto, relating
to
the Collateral. Debtor further agrees that a carbon, photographic or other
reproduction of this Security Agreement or any financing statement describing
any Collateral is sufficient as a financing statement and may be filed in any
jurisdiction Secured Party may deem appropriate.
(b) Power
of Attorney.
Debtor
hereby irrevocably appoints Secured Party as Debtor's attorney-in-fact, such
power of attorney being coupled with an interest, with full authority in the
place and stead of Debtor and in the name of Debtor or otherwise, from time
to
time after the occurrence and during the continuance of an Event of Default
in
Secured Party's discretion, to take any action and to execute any instrument
which Secured Party may deem necessary or appropriate to accomplish the purposes
of this Agreement, including without limitation: (i) to obtain and adjust
insurance required by Secured Party hereunder; (ii) to demand, collect, xxx
for,
recover, compound, receive and give acquittance and receipts for moneys due
and
to become due under or in respect of the Collateral; (iii) to receive, endorse
and collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above; and (iv) to file any claims or take
any action or institute any proceedings which Secured Party may deem necessary
or appropriate for the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Secured Party with respect to the
Collateral.
(c) Performance
by Secured Party.
If
Debtor fails to perform any agreement or obligation provided herein, Secured
Party may itself perform, or cause performance of, such agreement or obligation,
and the expenses of Secured Party incurred in connection therewith shall be
a
part of the Indebtedness, secured by the Collateral and payable by Debtor on
demand.
(d) Debtor's
Receipt of Proceeds.
All
amounts and proceeds (including instruments and writings) received by Debtor
in
respect of such accounts or general intangibles shall be received in trust
for
the benefit of Secured Party hereunder and, upon request of Secured Party,
shall
be segregated from other property of Debtor and shall be forthwith delivered
to
Secured Party in the same form as so received (with any necessary endorsement)
and applied to the Indebtedness in such manner as Secured Party deems
appropriate in its sole discretion.
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(e) Notification
of Account Debtors.
Upon
the occurrence and during the continuance of an Event of Default, Secured Party
may at its discretion from time to time notify any or all obligors under any
accounts or general intangibles (i) of Secured Party's security interest in
such
accounts or general intangibles and direct such obligors to make payment of
all
amounts due or to become due to Debtor thereunder directly to Secured Party,
and
(ii) to verify the accounts or general intangibles with such obligors. Secured
Party shall have the right, at the expense of Debtor, to enforce collection
of
any such accounts or general intangibles and to adjust, settle or compromise
the
amount or payment thereof, in the same manner and to the same extent as
Debtor.
7. Events
of Default.
Each of
the following constitutes an "Event
of Default"
under
this Agreement:
(a) Default
Under other Loan Documents.
The
occurrence of an event of default under the Loan Agreement any of the other
Loan
Documents beyond any applicable notices and/or cure period; or
(b) Execution
on Collateral.
The
Collateral or any portion thereof is taken on execution or other process of
law
in any action against Debtor; or
(c) Abandonment.
Debtor abandons the Collateral or any material portion thereof; or
(d) Action
by
Other Lienholder.
The
holder of any lien or security interest on any of the assets of Debtor,
including without limitation, the Collateral (without hereby implying the
consent of Secured Party to the existence or creation of any such lien or
security interest on the Collateral), declares a default thereunder or
institutes foreclosure or other proceedings for the enforcement of its remedies
thereunder; or
8. Remedies
and Related Rights.
If an
Event of Default shall have occurred, and without limiting any other rights
and
remedies provided herein, under any of the other Loan Documents or otherwise
available to Secured Party, Secured Party may exercise one or more of the rights
and remedies provided in this Section.
(a) Remedies.
Secured Party may from time to time at its discretion, without limitation and
without notice except as expressly provided in any of the Loan
Documents:
(i) exercise
in respect of the Collateral all the rights and remedies of a secured party
under the Code (whether or not the Code applies to the affected
Collateral);
(ii) require
Debtor to, and Debtor hereby agrees that it will at its expense and upon request
of Secured Party, assemble the Collateral as directed by Secured Party and
make
it available to Secured Party at a place to be designated by Secured Party
which
is reasonably convenient to both parties; provided,
however,
if
Secured Party has access to Debtor’s retail locations, such locations shall be
sufficient as the location of the assembly of the Collateral.
(iii) reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest granted hereunder by any available judicial
procedure;
(iv) sell
or
otherwise dispose of, at its office, on the premises of Debtor or elsewhere,
the
Collateral, as a unit or in parcels, by public or private proceedings, and
by
way of one or more contracts (it being agreed that the sale or other disposition
of any part of the Collateral shall not exhaust Secured Party's power of sale,
but sales or other dispositions may be made from time to time until all of
the
Collateral has been sold or disposed of or until the Indebtedness has been
paid
and performed in full), and at any such sale or other disposition it shall
not
be necessary to exhibit any of the Collateral;
(v) buy
the
Collateral, or any portion thereof, at any public sale;
(vi) buy
the
Collateral, or any portion thereof, at any private sale if the Collateral is
of
a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vii) apply
for
the appointment of a receiver for the Collateral, and Debtor hereby consents
to
any such appointment; and
(viii) at
its
option, retain the Collateral in satisfaction of the Indebtedness whenever
the
circumstances are such that Secured Party is entitled to do so under the Code
or
otherwise.
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Debtor
agrees that in the event Debtor is entitled to receive any notice under the
Uniform Commercial Code, as it exists in the state governing any such notice,
of
the sale or other disposition of any Collateral, reasonable notice shall be
deemed given when such notice is deposited in a depository receptacle under
the
care and custody of the United States Postal Service, postage prepaid, at
Debtor's address set forth on the signature page hereof, ten (10) days prior
to
the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any
sale
of Collateral regardless of notice of sale having been given. Secured Party
may
adjourn any public or private sale from time to time by announcement at the
time
and place fixed therefor, and such sale may, without further notice, be made
at
the time and place to which it was so adjourned.
(b) Application
of Proceeds.
If any
Event of Default shall have occurred, Secured Party may at its discretion apply
or use any cash held by Secured Party as Collateral, and any cash proceeds
received by Secured Party in respect of any sale or other disposition of,
collection from, or other realization upon, all or any part of the Collateral
as
follows in such order and manner as Secured Party may elect:
(i) to
the
repayment or reimbursement of the reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by Secured
Party in connection with (A) the administration of the Loan Documents, (B)
the
custody, preservation, use or operation of, or the sale of, collection from,
or
other realization upon, the Collateral, and (C) the exercise or enforcement
of
any of the rights and remedies of Secured Party hereunder;
(ii) to
the
payment or other satisfaction of any liens and other encumbrances upon the
Collateral;
(iii) to
the
satisfaction of the Indebtedness;
(iv) by
holding such cash and proceeds as Collateral;
(v) to
the
payment of any other amounts required by applicable law (including without
limitation, Section 9.504(a)(3) of the Code or any other applicable statutory
provision); and
(vi) by
delivery to Debtor or any other party lawfully entitled to receive such cash
or
proceeds whether by direction of a court of competent jurisdiction or
otherwise.
(c) Deficiency.
In the
event that the proceeds of any sale of, collection from, or other realization
upon, all or any part of the Collateral by Secured Party are insufficient to
pay
all amounts to which Secured Party is legally entitled, Borrower and any party
who guaranteed or is otherwise obligated to pay all or any portion of the
Indebtedness shall be liable for the deficiency, together with interest thereon
as provided in the Loan Documents.
(d) Non-Judicial
Remedies.
In
granting to Secured Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Debtor expressly waives, renounces
and knowingly relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Debtor recognizes and concedes
that non-judicial remedies are consistent with the usage of trade, are
responsive to commercial necessity and are the result of a bargain at arm's
length. Nothing herein is intended to prevent Secured Party or Debtor from
resorting to judicial process at either party's option.
(e) Other
Recourse.
Debtor
waives any right to require Secured Party to proceed against any third party,
exhaust any Collateral or other security for the Indebtedness, or to have any
third party joined with Debtor in any suit arising out of the Indebtedness
or
any of the Loan Documents, or pursue any other remedy available to Secured
Party. Debtor further waives any and all notice of acceptance of this Agreement
and of the creation, modification, rearrangement, renewal or extension of the
Indebtedness. Debtor further waives any defense arising by reason of any
disability or other defense of any third party or by reason of the cessation
from any cause whatsoever of the liability of any third party. Until all of
the
Indebtedness shall have been paid in full, Debtor shall have no right of
subrogation and Debtor waives the right to enforce any remedy which Secured
Party has or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now or
hereafter held by Secured Party. Debtor authorizes Secured Party, and without
notice or demand and without any reservation of rights against Debtor and
without affecting Debtor's liability hereunder or on the Indebtedness to (i)
take or hold any other property of any type from any third party as security
for
the Indebtedness, and exchange, enforce, waive and release any or all of such
other property, (ii) apply such other property and direct the order or manner
of
sale thereof as Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive, enforce or
modify any of the provisions of any of the Loan Documents executed by any third
party, and (v) release or substitute any third party.
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9. Omitted.
10. Miscellaneous.
(a) Entire
Agreement.
This
Agreement contains the entire agreement of Secured Party and Debtor with respect
to the Collateral. If the parties hereto are parties to any prior agreement,
either written or oral, relating to the Collateral, the terms of this Agreement
shall amend and supersede the terms of such prior agreements as to transactions
on or after the effective date of this Agreement, but all security agreements,
financing statements, guaranties, other contracts and notices for the benefit
of
Secured Party shall continue in full force and effect to secure the Indebtedness
unless Secured Party specifically releases its rights thereunder by separate
release.
(b) Amendment.
No
modification, consent or amendment of any provision of this Agreement or any
of
the other Loan Documents shall be valid or effective unless the same is in
writing and signed by the party against whom it is sought to be
enforced.
(c) Actions
by Secured Party.
The
lien, security interest and other security rights of Secured Party hereunder
shall not be impaired by (i) any renewal, extension, increase or modification
with respect to the Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured Party may grant
with
respect to the Collateral, or (iii) any release or indulgence granted to any
endorser, guarantor or surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the lien, security
interest or other security rights of Secured Party hereunder or affect the
obligations of Debtor hereunder.
(d) Waiver
by Secured Party.
Secured
Party may waive any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any default without
waiving the Event of Default remedied. Neither the failure by Secured Party
to
exercise, nor the delay by Secured Party in exercising, any right or remedy
upon
any Event of Default shall be construed as a waiver of such Event of Default
or
as a waiver of the right to exercise any such right or remedy at a later date.
No single or partial exercise by Secured Party of any right or remedy hereunder
shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by Debtor therefrom shall
be
effective unless the same shall be in writing and signed by Secured Party and
then such waiver or consent shall be effective only in the specific instances,
for the purpose for which given and to the extent therein specified. No notice
to or demand on Debtor in any case shall of itself entitle Debtor to any other
or further notice or demand in similar or other circumstances.
(e) Costs
and Expenses.
Debtor
will upon demand pay to Secured Party the amount of any and all reasonable
costs
and expenses (including without limitation, attorneys' fees and expenses),
which
Secured Party may incur in connection with (i) the transactions which give
rise
to the Loan Documents, (ii) the preparation of this Agreement and the perfection
and preservation of the security interests granted under the Loan Documents,
(iii) the administration of the Loan Documents, (iv) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon,
the Collateral, (v) the exercise or enforcement of any of the rights of Secured
Party under the Loan Documents, or (vi) the failure by Debtor to perform or
observe any of the provisions hereof.
(f) GOVERNING
LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION
AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS
OF
A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue.
This
Agreement has been entered into in the county in Texas where Bank's address
for
notice purposes is located, and it shall be performable for all purposes in
such
county. Courts within the State of Texas shall have jurisdiction over any and
all disputes arising under or pertaining to this Agreement and venue for any
such disputes shall be in the county or judicial district where this Agreement
has been executed and delivered.
(h) Severability.
If any
provision of this Agreement is held by a court of competent jurisdiction to
be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to
be
illegal, invalid or unenforceable.
(i) No
Obligation.
Nothing
contained herein shall be construed as an obligation on the part of Secured
Party to extend or continue to extend credit to Borrower.
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(j) Notices.
All
notices and other communications provided for in this Agreement shall be given
or made by telex, telegraph, telecopy, cable, or in writing and telexed,
telecopied, telegraphed, cabled, mailed by certified mail return receipt
requested, or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party
at
such other address as shall be designated by such party in a notice to the
other
party given in accordance with this Section. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly given
when transmitted by telex or telecopy, subject to telephone confirmation of
receipt, or delivered to the telegraph or cable office, subject to telephone
confirmation of receipt, or when personally delivered or, in the case of a
mailed notice, when duly deposited in the mails, in each case given or addressed
as aforesaid.
(k) Binding
Effect and Assignment.
This
Agreement (i) creates a continuing security interest in the Collateral, (ii)
shall be binding on Debtor and the heirs, executors, administrators, personal
representatives, successors and assigns of Debtor, and (iii) shall inure to
the
benefit of Secured Party and its successors and assigns. Without limiting the
generality of the foregoing, Secured Party may pledge, assign or otherwise
transfer the Indebtedness and its rights under this Agreement and any of the
other Loan Documents to any other party in accordance with the Loan Agreement.
Debtor's rights and obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Secured Party.
(l) Termination.
It is
contemplated by the parties hereto that from time to time there may be no
outstanding Indebtedness, but notwithstanding such occurrences, this Agreement
shall remain valid and shall be in full force and effect as to subsequent
outstanding Indebtedness. Upon (i) the satisfaction in full of the Indebtedness,
(ii) the termination or expiration of any commitment of Secured Party to extend
credit to Borrower, (iii) written request for the termination hereof delivered
by Debtor to Secured Party, and (iv) written release or termination delivered
by
Secured Party to Debtor, this Agreement and the security interests created
hereby shall terminate. Upon termination of this Agreement and Debtor's written
request, Secured Party will, at Debtor's sole cost and expense, return to Debtor
such of the Collateral as shall not have been sold or otherwise disposed of
or
applied pursuant to the terms hereof and execute and deliver to Debtor such
documents as Debtor shall reasonably request to evidence such
termination.
(m) Cumulative
Rights.
All
rights and remedies of Secured Party hereunder are cumulative of each other
and
of every other right or remedy which Secured Party may otherwise have at law
or
in equity or under any of the other Loan Documents, and the exercise of one
or
more of such rights or remedies shall not prejudice or impair the concurrent
or
subsequent exercise of any other rights or remedies.
(n) Gender
and Number.
Within
this Agreement, words of any gender shall be held and construed to include
the
other gender, and words in the singular number shall be held and construed
to
include the plural and words in the plural number shall be held and construed
to
include the singular, unless in each instance the context requires
otherwise.
(o) Descriptive
Headings.
The
headings in this Agreement are for convenience only and shall in no way enlarge,
limit or define the scope or meaning of the various and several provisions
hereof.
EXECUTED
as of the date first written above.
|
Debtor’s
Address:
00000
Xxxxxx Xxxxxxx
Xxxxx
000
Xxxxxx,
Xxxxx 00000-0000
Fax
No.: (000) 000-0000
Telephone
No.: (000)
000-0000
Attn:
Xxxxx X. Xxxx
|
DEBTOR:
(Debtor)
a _____________(Entity)
By:
/s/
Xxxxx X. Xxxx
Name: Xxxxx
X. Xxxx
Title:
President and Chief Executive
Officer
|
Secured
Party's Address:
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Fax
No.:
(000) 000-0000
Telephone
No.: (000) 000-0000
Attention:
Commercial Lending
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