PLEDGE AND SECURITY AGREEMENT (QUEST EASTERN RESOURCE LLC)
Exhibit 10.20
EXECUTION
PLEDGE AND SECURITY AGREEMENT
(QUEST EASTERN RESOURCE LLC)
THIS PLEDGE AND SECURITY AGREEMENT (herein referred to as this “Security Agreement”) is
executed as of September 21, 2010, by QUEST EASTERN RESOURCE LLC, a Delaware 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 Third Amended and Restated Credit Agreement dated of even
date herewith (as the same may hereafter be amended, supplemented and restated, the “Credit
Agreement”), between Debtor, Royal Bank of Canada, as lender (together with any permitted successor
or assign, “Lender”), and Royal Bank of Canada, as Administrative Agent and Collateral Agent for
Lender, the Lender has agreed to make Loans for the account of the Borrower;
WHEREAS, Debtor has duly authorized the execution, delivery and performance of this Security
Agreement; and
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 Lender’s obligations to extend credit under the Loan Documents;
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 Lender is obligated to lend under the Credit Agreement and thereafter until the Obligations
are paid and performed in full or satisfied or discharged in accordance with the terms of the Asset
Sale Agreement.
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:
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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 Royal Bank of Canada, and its permitted successors and assigns.
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; it being the intention and contemplation of Debtor and
Secured Party that future advances will be made by Lender to the 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
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.
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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 of Debtor and pledges, collaterally
transfers, and assigns the Collateral to Secured Party, all upon and subject to the terms and
conditions of this Security Agreement. Obligations referred to herein includes all renewals,
extensions and modifications thereof, and all substitutions thereof, in whole or in part. 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 with
respect to any of the Collateral or any transaction involving or giving rise thereto.
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);
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(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, to the extent not merely evidenced by book entries, 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”);
(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
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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) Intentionally Deleted;
(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
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 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;
(l) 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 non inventory goods which will give rise to any such
Collateral or are evidenced, identified, or represented therein or thereby.
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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. Provided, however, Collateral does not include the Excluded Assets.
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 the 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, subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other Laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at Law. 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 and the lien priority provisions hereof.
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 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 and the lien
priority provisions hereof. None of the Collateral has been delivered nor control with
respect thereto given to any Person other than the Secured Party. 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 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
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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, the notation of a Lien in favor of the Secured Party on any motor
vehicle certificate of title, and the filing of a fixture filing in the counties where any
fixtures or other real estate interests are located, 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 and the Liens created hereunder.
(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.
(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 include 100% of the issued
and outstanding common
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stock or other equity interests of each Subsidiary of the Debtor owned by the 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, subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other Laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at Law 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 and the lien priority provisions hereof. For the avoidance of doubt, as of
the date of this Security Agreement, there are no Pledged Securities.
(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 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. For the avoidance of doubt, as of the date of this Security
Agreement, there are no Partnership/Limited Liability Company Interests.
(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.
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(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 Secured Party, 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 licensee (as to which this representation is inapplicable), the Debtor is
the sole and exclusive owner of the entire and unencumbered Right, title, and
interest in and to its owned Intellectual Property 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).
(iii) As of the date hereof, to Debtor’s knowledge, no third party is
infringing any of Debtor’s Rights under its 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 to the extent required in the Debtor’s reasonable
business judgment, 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
its 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 the
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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 Lender is committed to make Loans under the Credit Agreement, and
until the Obligations are paid and performed in full (except as provided in Section 10.01(c) of the
Credit Agreement) or satisfied or discharged in accordance with the terms of the Asset Sale
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 of the Credit Agreement 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. Update all annexes hereto if any information therein 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.
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(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 (as defined in Article 9 of the UCC) 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 (as
defined in Article 9 of the UCC) and to the extent required under paragraph (t) hereof, 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.
(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 reasonably 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.
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(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 material 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 a contractual, common Law, or statutory
landlord’s Lien 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 with a fair market value of at
least $50,000, cause the Security Interest to be properly noted thereon.
(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 any of the Pledged Securities; and take any action
requested by Secured
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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 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 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 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;
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(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 except to the extent not required in
Debtor’s reasonable business judgment;
(vi) Not enter into any agreement including, but not limited to any licensing
agreement, that is inconsistent with Debtor’s obligations under this Security
Agreement or any of the other Loan Documents;
(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 an 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
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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 (10)
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.
(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
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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 in accordance with any applicable federal and state securities
laws. 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 (10) Business 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 for sale at such board or exchange, and (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
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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 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 except to the extent
satisfied or discharged in accordance with the terms of the Asset Sale Agreement.
(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 and Debtor shall be
credited with the proceeds of the sale.
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
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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 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 upon an Event of Default) 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,
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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.
(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 (5) 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
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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 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 Moody’s
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 use reasonable care in the
custody and preservation of such Collateral but 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
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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; provided, however, Secured Party shall permit disbursements and
withdrawals from the Cash Collateral Account to the extent necessary to comply with
applicable Law, such as for the payment of payroll taxes and other obligations for which
Debtor (or a member of its governing body) would be liable under applicable Law. 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 Lender 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 prior
notice to Debtor, (i) to transfer to or to register in the name of Secured Party or the
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 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. If not notified
before taking any of the foregoing actions, Secured Party shall promptly, and in any event
within two (2) Business Days, notify Debtor after taking any of the foregoing actions
(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
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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
(with respect to mail relating to payments on Collateral) take action with respect
to mail addressed to Debtor; provided however, Secured Party shall promptly deliver
to Debtor any mail not relating to Collateral or the preservation or enforcement of
Secured Party’s rights with respect to the Collateral; 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 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
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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 Party’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 except for the
failure to account to Debtor for funds received by Secured Party and except for failure to
use reasonable care in the custody and preservation of Collateral in its possession. 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 the 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 the 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 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.
(1) 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 the 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 the Lender harmless from and against, and covenants to defend Secured
Party and the 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 the Lender, or any of their respective officers, employees,
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agents, advisors, employees, or representatives, howsoever arising or incurred because
of, incident to, or with respect to Collateral owned by Debtor 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 the 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
earlier of the satisfaction or discharge of the Obligations in accordance with the terms of
the Asset Sale Agreement or until the termination of the obligations of Lender to make Loans
under the Loan Documents and the payment in full of the Obligations (other than any
contingent indemnity obligations); and (ii) inure to the benefit of and be enforceable by
Secured Party, Lender, and their respective successors, transferees, and permitted assigns.
Without limiting the generality of the foregoing clause (ii), Secured Party and Lender 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 Lender, as the case may be. Upon payment in full of the
Obligations (other than any contingent indemnity obligations) Debtor shall be entitled to
the 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 Secured Party shall release the Liens created
by this Security Agreement in accordance with Section 10.01 of the Credit Agreement and the
terms of the Asset Sale 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 the Debtor following such
termination, promptly deliver to the Debtor any Collateral held by the Secured Party
hereunder, and promptly execute and deliver to the Debtor such documents and instruments as
the 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 the Debtor in a transaction permitted by the Credit
Agreement or pursuant to the Asset Sale Agreement, then the Secured Party, at the request
and expense of the Debtor, shall promptly execute and deliver releases as provided in the
Credit Agreement.
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(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 the Lender to
Debtor; (vi) any neglect, delay, omission, failure, or refusal of Secured Party or the
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 the 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 the Lender against Debtor or any new agreement between or among Secured
Party, Lender and Debtor, it being understood that except as expressly provided herein,
neither Secured Party nor Lender shall be required to give Debtor any notice of any kind
under any 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 except to the
extent expressly provided for herein, under the Credit Agreement, or under the Asset Sale
Agreement; (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 the 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 the Lender to proceed against any other Person, to
exhaust its Rights in Collateral, or to pursue any other Right which Secured Party or the
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
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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 the 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.
(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 permitted assigns.
(i) Secured Party is the agent for the Lender under the Credit Agreement. The
Security Interest and all Rights granted to Secured Party hereunder or in connection
herewith are for the benefit of the Lender, and Secured Party may, without the
joinder of the Lender, exercise any and all Rights in favor of Secured Party or
Lender 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 the Lender
vis-à-vis Secured Party 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) Except for this Security Agreement and assignments made in furtherance
hereof, Debtor may not, without the prior written consent of Secured Party, assign
any Rights, duties, or obligations hereunder.
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(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.
(1) 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
Attn: General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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 EASTERN RESOURCE LLC, | ||||
| a Delaware limited liability company | ||||
| By: | POSTROCK ENERGY SERVICES CORPORATION, | |||
| its sole member | ||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx, President and | ||||
| Chief Executive Officer | ||||
Signature Page
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ANNEX A TO SECURITY AGREEMENT
DEBTOR INFORMATION AND LOCATION OF COLLATERAL
| A. | Exact Legal Name of Debtor: Quest Eastern Resource 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: Delaware. | |
| E. | State Issued Organizational Identification Number: 3924111. | |
| 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: |
| • | Xxxxxxx WV | ||
| • | Xxxxxx WV | ||
| • | Xxxxxxx WV | ||
| • | Doddridge WV | ||
| • | Xxxxxx WV | ||
| • | Kanawha WV | ||
| • | Xxxxx WV | ||
| • | Lincoln WV | ||
| • | Xxxxxxxxx WV | ||
| • | Xxxxxxx WV | ||
| • | Xxxxx WV | ||
| • | Xxxxxx WV | ||
| • | Wood WV |
| J. | J.Jurisdiction(s) for Filing Financing Statements: Delaware. | |
| K. | Fixture filings in the relevant counties in which the properties are located: See Item I. above. |
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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. | Partnership/Limited Liability Company Agreements: None. | |
| E. | Commercial Tort Claims: None. | |
| F. | Deposit Accounts (including name of bank, address and account number): | |
| Quest Eastern Resource LLC Operating, Comerica Bank, Dallas, TX, Acct #: 1881278020 Quest Eastern Resource LLC Revenue, Comerica Bank, Dallas, TX, Acct #: 1881277931 |
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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 September 21, 2010 (as amended, modified, supplemented, or restated
from time to time, the “Security Agreement”), Quest Eastern Resource LLC, a company organized under
the laws of Delaware (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. | This letter agreement will terminate upon notice of termination hereof delivered by Pledgee to Depository Bank. 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 , 201 : | ||||||
| Depository Bank: | ||||||
| [NAME OF ENTITY] | ||||||
By: |
||||||
| Name: | ||||||
| Title: | ||||||
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ANNEX D TO SECURITY AGREEMENT
ACKNOWLEDGMENT OF PLEDGE
PARTNERSHIP/LIMITED LIABILITY COMPANY:
INTEREST OWNER:
INTEREST OWNER:
BY THIS ACKNOWLEDGMENT OF PLEDGE, dated as of , 201 ,
(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 Lender and as Secured Party under that certain Pledge and Security
Agreement dated as of September 21, 2010 (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
Quest Eastern Resource LLC’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
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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
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