EXHIBIT 10.21
GENERAL SUBORDINATED SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April __, 2004, between XXXXXX WELDING
COMPANY, a Michigan corporation with offices at 0000 Xxxxx Xxxxxx, Xxxxxxxxxx,
XX 00000 (the "Debtor"), and Xxxxx Xxxxxx and Xxxxx Xxxxxx, residents of the
State of Maryland (the "Secured Parties");
WITNESSETH:
WHEREAS, the Debtor is a subsidiary of Tarpon Industries, Inc. a Michigan
corporation ("Tarpon"); and
WHEREAS, Tarpon and the Secured Parties are parties to 8.0% promissory
notes issued by the Tarpon in the aggregate principal amount of $150,000
(herein, as at any time amended, extended, restated, renewed or modified, the
"Notes"); and
WHEREAS, it is a condition to the willingness of the Secured Parties to
accept the Notes and make the loan evidenced thereby that Debtor execute a
guaranty of even date guaranteeing Tarpon's performance under the Notes; and
WHEREAS, Debtor's performance under the guarantee is secured by a lien on
Debtor's assets, subordinate only to the liens of Debtor's senior lenders; and
WHEREAS, Debtor enter into this Agreement and grants to the Secured
Parties, as secured parties of equal priority, the security interest provided
for herein;
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. Terms. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meaning specified therefor in the Guaranty. As
used herein the following terms shall have the meanings specified and shall
include in the singular number the plural and in the plural number the singular:
"Assigned Agreements" shall mean all contracts and agreements of the
Debtor.
"Collateral" means all of the Debtor's right, title and interest in and
under or arising out of each and all of the following:
All personal property and fixtures of the Debtor of any type or
description, wherever located and now existing or hereafter arising or
acquired, including but not limited to the following:
(i) all of the Debtor's goods including, without limitation:
(A) all inventory, including without limitation,
equipment held for lease, whether raw materials, in process or
finished, all material or equipment usable in processing the
same and all documents of title covering any inventory (all of
the foregoing, "Inventory"), including without limitation that
located at the locations listed on Schedule 1 annexed hereto;
(B) all equipment (the "Equipment") employed in
connection with the Debtor's business, together with all
present and future additions, attachments and accessions
thereto and all substitutions therefor and replacements
thereof, including without limitation that located at the
locations listed on Schedule 1 annexed hereto;
(ii) all of the Debtor's present and future accounts, accounts
receivable, general intangibles, contracts and contract rights
(herein sometimes referred to as "Receivables"), including but not
limited to the Debtor's rights (including rights to payment) under
all Assigned Agreements, together with
(A) all claims, rights, powers or privileges and
remedies of the Debtor relating thereto or arising in
connection therewith including, without limitation, all
rights of the Debtor to make determinations, to exercise any
election (including, but not limited to, election of remedies)
or option or to give or receive any notice, consent, waiver or
approval, together with full power and authority to demand,
receive, enforce, collect or receipt for any of the foregoing
or any property which is the subject of the Assigned
Agreements, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any
action which (in the reasonable opinion of the Secured
Parties) may be necessary or advisable in connection with any
of the foregoing,
(B) all liens, security, guaranties, endorsements,
warranties and indemnities and all insurance and claims for
insurance relating thereto or arising in connection therewith,
(C) all rights to property forming the subject matter of
the Receivables including, without limitation, rights to
stoppage in transit and rights to returned or repossessed
property,
(D) all writings relating thereto or arising in
connection therewith including without limitation, all
notes, contracts, security agreements, guaranties, chattel
paper and other evidence of indebtedness or security, all
powers-of-attorney, all books, records, ledger cards and
invoices, all credit information, reports or memoranda and all
evidence of filings or registrations relating thereto,
(E) all catalogs, computer and automatic machinery
software and programs, and the like pertaining to operations
by the Debtor in, on or about any of its plants or warehouses,
all sales data and other information relating to sales or
service of products now or hereafter manufactured on or about
any of its plants, and all accounting information pertaining
to operations in, on or about any of its plants, and all media
in which or on which any of the information or knowledge or
data is stored or contained, and all computer programs used
for the compilation or printout of such information,
knowledge, records or data, and
(F) all accounts, contract rights, general intangibles
and other property rights of any nature whatsoever arising out
of or in connection
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with the foregoing, including without limitation, payments due
and to become due, whether as repayments, reimbursements,
contractual obligations, indemnities, damages or otherwise;
(iii) patents, patent applications, copyrights and
intellectual property of all description;
(iv) all other personal property of the Debtor of any nature
whatsoever, including, without limitation, all accounts, bank
accounts, deposits, credit balances, contract rights, inventory,
general intangibles, goods, equipment, instruments, chattel paper,
machinery, furniture, furnishings, fixtures, tools, supplies,
appliances, plans and drawings, together with all customer and
supplier lists and records of the business, and all property from
time to time described in any financing statement (UCC-1) signed by
the Debtor naming the Secured Parties as secured party; and
(v) all additions, accessions, replacements, substitutions or
improvements and all products and proceeds including, without
limitation, proceeds of insurance, of any and all of the Collateral
described in clauses (i) through (iii) above.
"Instrument" shall have the meaning specified in Article 3 of the Uniform
Commercial Code, as in effect from time to time in the State of New York and
shall also include any other writing which evidences a right to the payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
endorsement or assignment.
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books;
(b) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books;
(c) Liens (other than Liens arising under the Employee Retirement
Income Security Act of 1974, as amended, or Section 412(n) of the Internal
Revenue Code of 1986, as amended) incurred in the ordinary course of
business in connection with
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workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(d) judgment Liens in existence less than 60 days after the entry
thereof or with respect to which execution has been stayed;
(e) ground leases in respect of real property on which facilities
owned or leased by the Debtor or any of its subsidiaries are located;
(f) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Debtor and
its subsidiaries taken as a whole;
(g) any interest or title of a lessor secured by a lessor's interest
under any lease of real property on which facilities owned or leased by
the Debtor or any of its subsidiaries are located;
(h) a Lien ("Purchase Lien") on any asset securing indebtedness
(including capitalized lease obligations) incurred or assumed for the
purpose of financing the purchase price (including capitalized lease
payments in the nature thereof) of such asset, provided that such Purchase
Lien attaches only to the asset acquired with the proceeds of such
indebtedness and attaches concurrently with or within ten (10) days
following the acquisition thereof (but not including the matters referred
to in (j) below).
(i) the existing Liens ("Existing Liens") described on Schedule 2
annexed hereto.
(j) liens (the "Acquisition Liens") related to future acquisition
that have been approved, prior to such acquisitions, by the Secured
Parties.
"Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Receivables" has the meaning specified therefor in clause (ii) of the
definition of Collateral.
"Secured Obligations" means all obligations of the Debtor, whether for
fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Guaranty.
"Senior Indebtedness" shall mean all obligations and liabilities of and
any renewal, extension, refunding, amendment or modification of any such
indebtedness of Debtor, Debtor to Comerica Bank, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or to become
due, no existing or later arising and whatever the amount and however evidenced.
Section 2. Security Interests. As security for the payment and performance
of all Secured Obligations the Debtor does hereby grant and assign to the
Secured Parties a continuing
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perfected security interest in all of the Collateral, whether now existing or
hereafter arising or acquired and wherever located, subject to the priority, if
any, of Existing Liens and pari passu with any Purchase Liens and Acquisition
Lien.
Section 3. Subordination. The security interest granted in this Agreement
is expressly subordinated to the security interest(s) granted to any holder of
Senior Indebtedness (as defined above) in accordance with the terms of the
Subordination Agreement among Secured party Representative and Comerica Bank
dated___________________________, 2004.
Section 4. General Representations, Warranties and Covenants. The Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to the Debtor and
pursuant to and upon all the warranties, representations, covenants, and
agreements on the part of the Debtor contained herein, in the Guaranty and
otherwise made in writing in connection herewith or therewith.
(b) Except for the security interest of the Secured Parties therein,
the Debtor is, and as to Collateral acquired from time to time after the
date hereof the Debtor will be, the owner of all the Collateral free from
any lien, security interest, encumbrance or other right, title or interest
of any Person (other than Permitted Liens) and the Debtor shall defend the
Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Secured Parties.
(c) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) now on file
or registered in any public office covering any interest of any kind in
the Collateral, or intended to cover any such interest, which has not been
terminated or released by the secured party named therein and so long as
the Guaranty remains outstanding or any of the Secured Obligations of the
Debtor remain unpaid, the Debtor will not execute and there will not be on
file in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or
statements relating to the Collateral, except (i) financing statements
filed or to be filed in respect of and covering the security interest of
the Secured Parties hereby granted and provided for and (ii) with respect
to Permitted Liens.
(d) The chief executive office and chief place of business of the
Debtor is located at the address of the Debtor listed on the signature
page hereof, and the Debtor will not move its chief executive office and
chief place of business except to such new location as the Debtor may
establish in accordance with the last sentence of this Section 4(d). The
originals of all Assigned Agreements and all documents (as well as all
duplicates thereof) evidencing all Receivables and all other contract
rights or accounts and other property of the Debtor and the only original
books of account and records of the Debtor relating thereto are, and will
continue to be, kept at such chief executive office or at such new
location as the Debtor may establish in accordance with the last sentence
of this Section 4(d). The Debtor shall establish no such new location
until (i) it shall have given to the Secured Parties not less than 30
days' prior written notice of its intention to do so, clearly describing
such new location and providing such other information in connection
therewith as the Secured Parties may reasonably request, and (ii) with
respect to such new location, it shall have taken such action,
satisfactory to the Secured Parties
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(including, without limitation, all action required by Section 8 hereof),
to maintain the security interest of the Secured Parties in the
Receivables intended to be granted at all times fully perfected and in
full force and effect.
(e) Debtor has no Collateral located outside of the State of
Michigan on the date hereof.
(f) The name of the Debtor is as set forth on the signature page
hereto and the Debtor shall not change such name, conduct its business in
any other name or take title to the Collateral in any other name while
this Agreement remains in effect without the consent of the Secured
Parties. The Debtor has never had any name, or conducted business under
any name in any jurisdiction, other than its name set forth on the
signature page hereto, during the past six years other than as set forth
in Schedule 3 annexed hereto.
(g) At the Debtor's own expense, the Debtor will: (i) keep the
Collateral fully insured at all times with financially sound and
responsible insurance carriers against loss or damage by fire and other
risks, casualties and contingencies and in such manner and to the same
extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep
adequate insurance at all times against liability on account of damage to
persons and properties and under all applicable workers' compensation
laws, by insurers and in reasonable amounts approved by the Secured
Parties, for the benefit of the Debtor and the Secured Parties, (ii) upon
request by the Secured Parties, promptly deliver the insurance policies or
certificates thereof to the Secured Parties, and (iii) keep the Collateral
in good condition at all times (normal wear and tear excepted) and
maintain same in accordance with all manufacturer's specifications and
requirements. Upon any failure of the Debtor to comply with its
obligations pursuant to this Section 4(g), the Secured Parties may at its
option, and without affecting any of their other rights or remedies
provided herein or as a secured party under the Uniform Commercial Code,
procure the insurance protection one or both deem necessary and/or cause
repairs or modifications to be made to the Collateral and the cost of
either or both of which shall be a lien against the Collateral added to
the amount of the indebtedness secured hereby and payable on demand with
interest at a rate per annum equal to 15%.
(h) Subject to the rights of the holders of the Senior Indebtedness,
the Debtor hereby assigns to the Secured Parties all of Debtor's right,
title and interest in and to any and all monies which may become due and
payable with respect to the Collateral under any policy insuring the
Collateral (except proceeds relating to tangible personal property which
are applied to restoration or replacement), including return of unearned
premium, and shall cause any such insurance company to make payment
directly to the Secured Parties for application to amounts outstanding
under the Note in accordance with the terms of the Note and, to the extent
not provided therein, in such order as the Secured Parties shall
determine.
(i) The Debtor will not use the Collateral in violation of any
statute or ordinance or applicable insurance policy and will promptly pay
all taxes and assessments levied against the Collateral.
(j) The Debtor will not sell, transfer, change the registration, if
any, dispose of, attempt to dispose of, substantially modify or abandon
the Collateral or any part there-
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of other than sales of Inventory in the ordinary course of business and
the disposition of obsolete or worn-out Equipment in the ordinary course
of business.
(k) The Debtor will not assert against the Secured Parties any claim
or defense which the Debtor may have against any seller of the Collateral
or any part thereof or against any other Person with respect to the
Collateral or any part thereof.
(l) The Debtor will indemnify and hold the Secured Parties harmless
from and against any loss, liability, damage, costs and expenses
whatsoever arising from the Debtor's use, operation, ownership or
possession of the Collateral or any part thereof.
(m) The Debtor will maintain the confidentiality of all customer
lists and not sell or otherwise dispose of such lists except that the
Debtor shall deliver copies thereof to the Secured Parties upon its
request, which may be made at any time and from time to time after an
Event of Default.
(n) The Debtor will not enter into any agreement that is
inconsistent with the Debtor's obligations under this Agreement, without
the prior written consent of the Secured Parties.
Section 5. Special Provisions Concerning Assigned Agreements. The Debtor
represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of the Debtor and, to the best of its knowledge, the other
parties thereto, enforceable in accordance with their respective terms.
(b) The Debtor will faithfully abide by, perform and discharge each
and every material obligation, covenant and agreement to be performed by
the Debtor under the Assigned Agreements.
(c) At the request of the Secured Parties, and at the sole cost and
expense of the Debtor, the Debtor will enforce or secure the performance
of each and every material obligation, covenant, condition and agreement
contained in the Assigned Agreements to be performed by the other parties
thereto.
(d) The Debtor will not modify, amend or agree to vary any of the
Assigned Agreements in any material respect other than in the ordinary
course of business, or otherwise act or fail to act in a manner likely
(directly or indirectly) to entitle any party thereto to claim that the
Debtor is in default under the terms thereof.
(e) The Debtor will not terminate or permit the termination of any
Assigned Agreement, except in accordance with its terms, other than in the
ordinary course of business.
(f) Without the prior written consent of the Secured Parties, the
Debtor will not, other than in the ordinary course of business, waive or
in any manner release or discharge any party to any Assigned Agreement
from any of the material obligations, covenants, conditions and agreements
to be performed by it under such Assigned Agreement including, without
limitation, the obligation to make all payments in the manner and at the
time and places specified.
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(g) Subject to the rights of the holder of the Secured Indebtedness,
if the Secured Parties so requests after the occurrence of an Event of
Default and unless and until it is cured, the Debtor will hold any
payments received by it which are assigned and set over to the Secured
Parties by this Agreement for and on behalf of the Secured Parties and
turn them promptly over to the Secured Parties forthwith in the same form
in which they are received (together with any necessary endorsement) for
application to amounts outstanding under the Note in accordance with the
terms of the Note and, to the extent not provided therein, in such order
as the Secured Parties shall determine.
(h) The Debtor will appear in and defend every action or proceeding
arising under, growing out of or in any manner connected with the Assigned
Agreements or the obligations, duties or liabilities of the Debtor and any
assignee thereunder.
(i) Should the Debtor fail to make any payment or to do any act as
herein provided after 15 day's notice by the Secured Parties, the Secured
Parties may (but without obligation on the Secured Parties' part to do so
and without notice to or demand on the Debtor and without releasing the
Debtor from any obligation hereunder) make or do the same in such manner
and to such extent as the Secured Parties may deem reasonably necessary to
protect the security interests provided hereby, including specifically,
without limiting the general powers, the right to appear in and defend any
action or proceeding purporting to affect the security interests provided
hereby and the Debtor, and the Secured Parties may also perform and
discharge each and every obligation, covenant and agreement of the Debtor
contained in any Assigned Agreement and, in exercising any such powers,
pay necessary costs and expenses, employ counsel and incur and pay
reasonable attorneys' fees.
(j) Upon the request of the Secured Parties, the Debtor will send to
the Secured Parties copies of all notices, documents and other papers
furnished or received by it with respect to any of the Assigned
Agreements.
Section 6. Special Provisions Concerning Receivables.
(a) As of the time when each Receivable arises, the Debtor shall be
deemed to have warranted as to each such Receivable that such Receivable
and all papers and documents relating thereto are genuine and in all
respects what they purport to be, and that all papers and documents
relating thereto:
(i) will be signed by the account debtor named therein (or
such account debtor's duly authorized agent) or otherwise be binding
on the account debtor;
(ii) will represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and
owed by such account debtor arising out of the performance of labor
or services or the sale and delivery of merchandise or both;
(iii) to the extent evidenced by writings, will be the only
original writings evidencing and embodying such obligation of the
account debtor named therein; and
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(iv) will be in compliance and will conform with all
applicable federal, state and local laws (including applicable usury
laws) and applicable laws of any relevant foreign jurisdiction.
(b) The Debtor will keep and maintain at the Debtor's own cost and
expense satisfactory and complete records of the Receivables, including,
but not limited to, records of all payments received, all credits granted
thereon, all merchandise returned and all other dealings therewith, and
the Debtor will make the same available to the Secured Parties, at the
Debtor's own cost and expense, at any and all reasonable times upon notice
from the Secured Parties. The Debtor shall, at the Debtor's own cost and
expense, deliver the Receivables (including, without limitation, all
documents evidencing the Receivables) and such books and records to the
Secured Parties or to its representatives upon its demand at any time
after the occurrence of an Event of Default unless and until it is cured
and, if prior to the Maturity Date, Acceleration. If the Secured Parties
shall so request, the Debtor shall legend, in form and manner satisfactory
to the Secured Parties, the Receivables and other books, records and
documents of the Debtor evidencing or pertaining to the Receivables with
an appropriate reference to the fact that the Receivables have been
assigned to the Secured Parties and that the Secured Parties have a
security interest therein.
(c) Except in the ordinary course of business prior to an Event of
Default and, if prior to the Maturity Date, Acceleration, the Debtor will
not rescind or cancel any indebtedness evidenced by any Receivable or
modify any material term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable
or interest therein, without the prior written consent of the Secured
Parties, except that the Debtor may grant discounts in connection with the
prepayment of any Receivable in an amount which is customary in the line
of business in which the Debtor is engaged and consistent with the
Debtor's past practices.
(d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing
to impair the rights of the Secured Parties in the Receivables.
(e) The Debtor shall endeavor to collect or cause to be collected
from the account debtor named in each Receivable, as and when due
(including, without limitation, Receivables which are delinquent, such
Receivables to be collected in accordance with generally accepted lawful
collection procedures) any and all amounts owing under or on account of
such Receivable, and credit forthwith (on a daily basis) upon receipt
thereof all such amounts as are so collected to the outstanding balance of
such Receivable. The costs and expenses (including reasonable attorney's
fees) of collection, whether incurred by the Debtor or the Secured
Parties, shall be borne by the Debtor.
(f) If any of the Receivables becomes evidenced by an Instrument
(other than a check received in payment of a Receivable and deposited in
the ordinary course of business), the Debtor will notify the Secured
Parties thereof, and, upon request by the Secured Parties, promptly
deliver such Instrument to the Secured Parties appropriately endorsed to
the order of the Secured Parties as further security for the satisfaction
in full of the Secured Obligations.
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(g) Upon request of the Secured Parties, at any time when an Event
of Default and, if prior to the Maturity Date, Acceleration shall exist,
the Debtor shall promptly notify (in manner, form and substance
satisfactory to the Secured Parties) all Persons who are at any time
obligated under any Receivable that the Secured Parties possesses a
security interest in such Receivable and that all payments in respect
thereof are to be made to such account as the Secured Parties directs.
Section 7. Special Provisions Concerning Equipment. The Debtor will do
nothing to impair the rights of the Secured Parties in the Equipment. The Debtor
shall cause the Equipment to at all times constitute and remain personal
property. The Debtor will at all times keep all Equipment insured with
financially responsible insurance companies in favor of the Secured Parties, at
the expense of the Debtor, against such perils and in such amounts as are
customary for Persons in the same general line of business as the Debtor and
operating in similar geographic locations and markets. If the Debtor shall fail
to insure the Equipment to the Secured Parties's satisfaction, or if the Debtor
shall fail so to endorse and deposit all policies or certificates with respect
thereto, the Secured Parties shall have the right (but shall be under no
obligation) to procure such insurance and the Debtor agrees to reimburse the
Secured Parties for all costs and expenses of procuring such insurance, together
with interest at a rate per annum equal to 15%. The Secured Parties may apply
any proceeds of such insurance when received by it pursuant to the terms of this
Section 7 or Section 4(h) hereof toward the payment of any of the Secured
Obligations, whether or not the same shall then be due. The Debtor retains all
liability and responsibility in connection with the Equipment and the liability
of the Debtor to pay the Secured Obligations shall in no way be affected or
diminished by reason of the fact that such Equipment may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to the Debtor.
Section 8. Financing Statements; Documentary Stamp Taxes.
(a) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Parties from time to time
such lists, descriptions and designations of Inventory, warehouse
receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest
hereby granted, which the Secured Parties deem appropriate or advisable to
perfect, preserve or protect its security interest in the Collateral. The
Debtor hereby constitutes the Secured Parties its attornies-in-fact to
execute and file in the name and on behalf of the Debtor such additional
financing statements and other documents as the Secured Parties may
request, such acts of such attorney being hereby ratified and confirmed;
such power, being coupled with an interest, is irrevocable until the
Secured Obligations are paid in full. Further, to the extent permitted by
applicable law, the Debtor authorizes the Secured Parties to file any such
financing statements and other documents without the signature of the
Debtor or to execute the same on behalf of the Debtor. The Debtor will pay
all applicable filing fees and related expenses in connection with any
such financing statements.
(b) The Debtor agrees to procure, pay for, affix to any and all
documents and cancel any documentary tax stamps required by and in
accordance with, applicable law and the Debtor will indemnify and hold the
Secured Parties harmless against any liability (including interest and
penalties) in respect of such documentary stamp taxes.
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Section 9. Special Provisions Concerning Remedies and Sale. In addition to
any rights and remedies now or hereafter granted under applicable law and not by
way of limitation of any such rights and remedies, upon the occurrence of an
Event of Default the Secured Parties shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in any
applicable jurisdiction in addition to the rights and remedies provided herein,
in the Note and in any other agreement executed in connection with the Note
whereby the Debtor has granted any Lien to the Secured Parties. Without in any
way limiting the foregoing, upon the giving of notice to the Debtor of Secured
Parties' intent to pursue any one or all of the following or any other remedies:
(a) Upon the occurrence of an Event of Default, and unless and until
it is cured, the Secured Parties shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in any
applicable jurisdiction in addition to the rights and remedies provided
herein, in the Note and any other document whereby the Debtor has granted
any Lien to the Secured Parties. The Secured Parties shall have the right,
without further notice to, or assent by, the Debtor, in the name of the
Debtor or in the name of the Secured Parties or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle
for cash, credit or otherwise, and upon any terms and conditions,
any of the Receivables;
(iii) to endorse the name of the Debtor on any checks, drafts
or other orders or instruments for the payment of moneys payable to
the Debtor which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by the Secured Parties
necessary or advisable for the purpose of collecting or enforcing
payment of any Receivable;
(v) to make test verifications of the Receivables or any
portion thereof;
(vi) to notify any or all account debtors under any or all of
the Receivables to make payment thereof directly to the Secured
Parties for the account of the Secured Parties and to require the
Debtor to forthwith give similar notice to the account debtors;
(vii) to require the Debtor forthwith to account for and
transmit to the Secured Parties in the same form as received all
proceeds (other than physical property) of collection of Receivables
received by the Debtor and, until so transmitted, to hold the same
in trust for the Secured Parties and not commingle such proceeds
with any other funds of the Debtor;
(viii) to take possession of any or all of the Collateral and,
for that purpose, to enter, with the aid and assistance of any
Person or Persons and with or without legal process, any premises
where the Collateral, or any part thereof, are, or may be, placed or
assembled, and to remove any of such Collateral;
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(ix) to execute any instrument and do all other things
necessary and proper to protect and preserve and realize upon the
Collateral and the other rights contemplated hereby;
(x) upon notice to such effect, to require the Debtor to
deliver, at the Debtor's expense, any or all Collateral to the
Secured Parties at a place designated by the Secured Parties; and
(xi) without obligation to resort to other security, at any
time and from time to time, to sell, re-sell, assign and deliver all
or any of the Collateral, in one or more parcels at the same or
different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, at public or private sale,
for cash, upon credit or for future delivery, and at such price or
prices and on such terms as the Secured Parties may determine, with
the amounts realized from any such sale to be applied to the Secured
Obligations in the manner determined by the Secured Parties.
The Debtor hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as otherwise provided herein or as
may be required by law), all of which (except as otherwise provided) are
hereby expressly waived, to the extent permitted by law. The Secured
Parties shall not be obligated to do any of the acts hereinabove
authorized, but in the event that the Secured Parties elect to do any such
act, the Secured Parties shall not be responsible to the Debtor except for
their gross negligence or willful misconduct.
(b) The Secured Parties may take legal proceedings for the
appointment of a receiver or receivers (to which the Secured Parties shall
be entitled as a matter of right) to take possession of the Collateral
pending the sale thereof pursuant either to the powers of sale granted by
this Agreement or to a judgment, order or decree made in any judicial
proceeding for the foreclosure or involving the enforcement of this
Agreement. If, after the exercise of any or all of such rights and
remedies, any of the Secured Obligations shall remain unpaid, the Debtor
shall remain liable for any deficiency. After the indefeasible payment in
full of the Secured Obligations, any proceeds of the Collateral received
or held by the Secured Parties shall be turned over to the Debtor and the
Collateral shall be promptly reassigned to the Debtor by the Secured
Parties without recourse to the Secured Parties and without any
representations, warranties or agreements of any kind.
(c) Upon any sale of any of the Collateral, whether made under the
power of sale hereby given or under judgment, order or decree in any
judicial proceeding for the foreclosure or involving the enforcement of
this Agreement:
(i) the Secured Parties may, to the extent permitted by law,
bid for and purchase the property being sold, and upon compliance
with the terms of sale may hold, retain and possess and dispose of
such property in its own absolute right without further
accountability, and may, in paying the purchase money therefor,
deliver any Note or claims for interest thereon and any other
instruments evidencing the Secured Obligations or agree to the
satisfaction of all or a portion of the Secured Obligations in lieu
of cash in payment of the amount which shall be payable thereon, and
the Note and such instruments, in case the amounts so
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payable thereon shall be less than the amount due thereon, shall be
returned to the Secured Parties after being appropriately stamped to
show partial payment;
(ii) the Secured Parties may make and deliver to the purchaser
or purchasers a good and sufficient deed, xxxx of sale and
instrument of assignment and transfer of the property sold;
(iii) the Secured Parties are hereby irrevocably appointed the
true and lawful attornies-in-fact of the Debtor in its name and
stead, to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold and for such other
purposes as are necessary or desirable to effectuate the provisions
(including, without limitation, this Section 9) of this Agreement,
and for that purpose they may execute and deliver all necessary
deeds, bills of sale and instruments of assignment and transfer, and
may substitute one or more Persons with like power, the Debtor
hereby ratifying and confirming all that its said attorney, or such
substitute or substitutes, shall lawfully do by virtue hereof; but
if so requested by the Secured Parties or by any purchaser, the
Debtor shall ratify and confirm any such sale or transfer by
executing and delivering to the Secured Parties or to such purchaser
all property, deeds, bills of sale, instruments or assignment and
transfer and releases as may be designated in any such request;
(iv) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Debtor of, in and to
the property so sold shall be divested; such sale shall be a
perpetual bar both at law and in equity against the Debtor, its
successors and assigns, and against any and all Persons claiming or
who may claim the property sold or any part thereof from, through or
under the Debtor, its successors or assigns;
(v) the receipt of the Secured Parties or of the officer
thereof making such sale shall be a sufficient discharge to the
purchaser or purchasers at such sale for his or their purchase
money, and such purchaser or purchasers, and his or their assigns or
personal representatives, shall not, after paying such purchase
money and receiving such receipt of the Secured Parties or of such
officer therefor, be obliged to see to the application of such
purchase money or be in any way answerable for any loss,
misapplication or non-application thereof; and
(vi) to the extent that it may lawfully do so, and subject to
any legal requirement that the Secured Parties act in a commercially
reasonable manner, the Debtor agrees that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay,
extension or redemption laws, or any law permitting it to direct the
order in which the Collateral or any part thereof shall be sold, now
or at any time hereafter in force, which may delay, prevent or
otherwise affect the performance or enforcement of this Agreement,
the Note or any other agreement executed in connection with the Note
whereby the Debtor has granted any Lien to the Secured Parties, and
the Debtor hereby expressly waives all benefit or advantage of any
such laws and covenants that it will not hinder, delay or impede the
execution of any power granted or delegated to the Secured Parties
in this Agreement, but will suffer and permit the execution of every
such power as though no such laws were in force. In the event of any
sale of Collateral pursuant to this Section, the
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Secured Parties shall, at least 10 days before such sale, give the
Debtor written, telecopied or telex notice of its intention to sell.
Section 10. Application of Moneys.
(a) Except as otherwise provided herein or in the Note or Guaranty,
all moneys which the Secured Parties shall receive, in accordance with the
provisions hereof, shall be applied (to the extent thereof) in the
following manner: First, to the payment of all costs and expenses
reasonably incurred in connection with the administration and enforcement
of, or the preservation of any rights under, this Agreement or any of the
reasonable expenses and disbursements of the Secured Parties (including,
without limitation, the reasonable fees and disbursements of its counsel
and agents); Second, to the payment of all Secured Obligations arising out
of the Note in accordance with the terms of the Note and, if not therein
provided, in such order as the Secured Parties may determine; and Third,
to the payment of all other Secured Obligations in such order as the
Secured Parties may determine.
(b) If after applying any amounts which the Secured Parties have
received in respect of the Collateral any of the Secured Obligations
remain unpaid, the Debtor shall continue to be liable for any deficiency,
together with interest.
Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses
of whatever kind or nature, including but not limited to the reasonable
attorneys' fees and legal expenses incurred by the Secured Parties in connection
with this Agreement, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or discharge of
any taxes, counsel fees, maintenance fees, fees and other costs relating to the
encumbrances or otherwise protecting, maintaining, preserving the Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to the Collateral, shall be borne and paid by the Debtor on written demand by
the Secured Parties setting forth in reasonable detail the nature of such
expenses and until so paid shall be added to the principal amount of the Secured
Obligations and shall bear interest at a rate per annum equal to 15%. In
addition, the Debtor will pay, and indemnify and hold the Secured Parties
harmless from and against, any and all liabilities, obligations, losses, damages
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the Collateral, including (without
limitation) claims of patent or trademark infringement and any claim of unfair
competition or anti-trust violation.
Section 12. Miscellaneous.
(a) All notices, communications and distributions hereunder shall be
in writing (including telecopied communication) and telecopied, personally
delivered or delivered by Federal Express or other reputable overnight
courier service, if to the Debtor addressed to it at its address set forth
opposite its signature below, if to the Secured Parties, addressed to it
at its address set forth opposite its signature below, or as to either
party at such other address as shall be designated by such party in a
written notice to such other party complying as to delivery with the terms
of this Section. All such notices and other communications shall be
effective (i) if telecopied, upon receipt by the addressee, (ii) if
personally delivered, upon such delivery and (iii) if delivered by
overnight courier service, on the business day following delivery thereof
to such courier service in time for next-business-day delivery.
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(b) No delay on the part of the Secured Parties in exercising any of
their rights, remedies, powers and privileges hereunder or partial or
single exercise thereof, shall constitute a waiver thereof. None of the
terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by the
Debtor and the Secured Parties. No notice to or demand on the Debtor in
any case shall entitle the Debtor to any other or further notice or demand
in similar or other circumstances or constitute a waiver of any of the
rights of the Secured Parties to any other or further action in any
circumstances without notice or demand.
(c) The obligations of the Debtor hereunder shall remain in full
force and effect without regard to, and shall not be impaired by, (i) any
bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of the Debtor; (ii) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege
under or in respect of the Note, this Agreement or any other agreement
executed in connection with the Note whereby the Debtor has granted any
Lien to the Secured Parties or any other agreement executed in connection
with any of the foregoing, the Secured Obligations or any security for any
of the Secured Obligations; or (iii) any amendment to or modification of
any of the foregoing; whether or not the Debtor shall have notice or
knowledge of any of the foregoing. The rights and remedies of the Secured
Parties herein provided are cumulative and not exclusive of any rights or
remedies which the Secured Parties would otherwise have.
(d) This Agreement shall be binding upon the Debtor and its
successors and assigns and shall inure to the benefit of the Secured
Parties and their successors and assigns, except that the Debtor may not
transfer or assign any of its obligations, rights or interest hereunder
without the prior written consent of the Secured Parties and any such
purported assignment by the Debtor shall be void. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement.
(e) If Debtor has, forms or acquires any subsidiary, such subsidiary
shall thereupon guaranty the Secured Obligations and enter into a security
agreement with the Secured Parties substantially identical to this
Agreement, all in form and substance satisfactory to the Secured Parties.
(f) The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
(g) Any provision of this Agreement, which is prohibited or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(h) All rights, remedies and powers provided by this Agreement may
be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and the provisions hereof are
intended to be subject to all applicable mandatory provisions of law that
may be controlling and to be limited to the extent necessary so that they
will not render this Agreement invalid, unenforceable in whole or in part
or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
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(i) This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the
laws of the State of New York except to the extent that matters of title,
or creation, perfection and priority of the security interests created
hereby, or procedural issues of foreclosure are required to be governed by
the laws of the state in which the Collateral, or part thereof, is
located. EACH PARTY HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTE OR ANY FINANCING
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF ANY SUCH PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE SECURED PARTY'S ENTERING INTO THIS AGREEMENT.
(j) It is expressly agreed, anything herein, in the Note or in any
other agreement or instrument executed in connection with the Note to the
contrary notwithstanding, that the Debtor shall remain liable to perform
all of the obligations, if any, assumed by it with respect to the
Collateral and the Secured Parties shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of
this Agreement, nor shall the Secured Parties be required or obligated in
any manner to perform or fulfill any of the obligations of the Debtor
under or pursuant to any or in respect of any Collateral.
(k) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
Addresses XXXXXX WELDING COMPANY
as Debtor
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name:
Title: President
/s/ Xxxxx Xxxxxx
---------------------------------
By: Xxxxx Xxxxxx as Secured Party
0000 Xxxxxxx Xxxxxxx, # 000
Xxxxxxxx, XX 00000
/s/ Xxxxx Xxxxxx
---------------------------------
By: Xxxxx Xxxxxx as Secured Party
00000 Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
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