EXHIBIT 10.8
COMERICA BANK-TEXAS
AND
▇▇▇▇▇▇ GROUP, INC., ET AL.
THIRD AMENDMENT TO
FIRST AMENDED AND RESTATED
REVOLVING CREDIT LOAN AGREEMENT
DATED: ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇:
Bank = Comerica Bank-Texas
Borrower = ▇▇▇▇▇▇ Group, Inc.
TGL = ▇▇▇▇▇▇ Group of Louisiana, Inc.
TGS = ▇▇▇▇▇▇ Group of Sweden, Inc.
TGSU = ▇▇▇▇▇▇ Group (Suisse) GmbH
TGSR = ▇▇▇▇▇▇ Group (Suisse Results) GmbH
TGG = ▇▇▇▇▇▇ Group GmbH
TGA = ▇▇▇▇▇▇ Group Asia PTE LTD
TGH = ▇▇▇▇▇▇ Group Hong Kong Limited
DOCUMENT
1. Third Amendment to First Amended and Restated Revolving Credit Loan
Agreement
2. Revolving Credit Note ($2,500,000)
3. Term Note ($5,000,000)
4. Restated Security Agreement (all assets) (to be executed by Borrower)
5. Security Agreement (all assets) (to be executed by TGL)
6. Security Agreement (all assets) (to be executed by TGS)
7. Security Agreement (Negotiable Collateral) (stock)
8. Security Agreement (Intellectual Property)
9. Security Interest Assignment of Copyrights, Patents, and Trademarks
10. Advance Formula Agreement
11. Notice of Pledge and Control Agreement (TGSU)
12. Notice of Pledge and Control Agreement (TGSR)
13. Notice of Pledge and Control Agreement (TGG)
14. Notice of Pledge and Control Agreement (TGL)
15. Notice of Pledge and Control Agreement (TGS)
16. Notice of Pledge and Control Agreement (TGA)
17. Notice of Pledge and Control Agreement (TGK)
18. Disclaimer of Oral Agreements
19. Omnibus General Certificates
20. Subordination Agreements
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED
REVOLVING CREDIT LOAN AGREEMENT
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN
AGREEMENT (this "AMENDMENT"), dated as of March 29, 2002, is among ▇▇▇▇▇▇
GROUP, INC., a Delaware corporation (the "BORROWER"), each of the Domestic
Subsidiaries and Foreign Subsidiaries (as such terms are defined below) that is
a signatory hereto, and COMERICA BANK-TEXAS, a Texas banking association
("LENDER").
RECITALS:
The Borrower and the Lender have entered into that certain First Amended
and Restated Revolving Credit Loan Agreement dated as of December 4, 1996 (as
the same has been or may hereafter be amended, restated or otherwise modified
from time to time, the "AGREEMENT").
In connection with the Agreement, each Domestic Subsidiary and each Foreign
Subsidiary have executed Guaranties securing the obligations, Indebtedness and
liabilities of the Borrower in favor of the Lender (collectively, the
"GUARANTIES").
The Borrower, each Domestic Subsidiary, each Foreign Subsidiary, and the
Lender now desire to amend the Agreement as more specifically described herein.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows (all provisions of this
Amendment being effective as of March 29, 2002 (the "EFFECTIVE DATE") unless
otherwise stated herein):
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS AND RATIFICATIONS
Each of the following amendments is effective as of the date of this
Amendment, unless otherwise stated herein.
Section 2.1 AMENDMENTS TO RECITALS. All references in the Recitals to
"$10,000,000" shall be changed to read "2,500,000."
Section 2.2 AMENDMENTS TO SECTION 1 (DEFINITIONS) OF THE AGREEMENT.
(a) The following definitions in Section 1.1 of the Agreement
are amended and restated in their entirety as follows:
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 1
"APPLICABLE RATE" shall mean the Prime Rate plus (i) for Advances
evidenced by the Revolving Credit Note, two percent (2%), and (ii) for
Advances evidenced by the Term Note, four percent (4%).
"COLLATERAL" shall mean all of the Borrower's and each Domestic
Subsidiary's assets and all of the following property Borrower and each
Domestic Subsidiary now or later owns or has an interest in, wherever
located, including without limitation:
(i) all Accounts Receivable (for purposes of this Agreement,
"Accounts Receivable" consists of all Accounts, Chattel Paper
(including without limit Electronic Chattel Paper and Tangible Chattel
Paper), contract rights, Deposit Accounts, Documents, Instruments and
rights to payment evidenced by Chattel Paper, Documents or
Instruments, Health Care Insurance Receivables, Commercial Tort
Claims, Letters of Credit, Letter of Credit Rights, Supporting
Obligations, and rights to payment for money or funds advanced or
sold);
(ii) all Inventory;
(iii) all Equipment and Fixtures;
(iv) all Software (for purposes of this Agreement "Software"
consists of all (i) computer programs and supporting information
provided in connection with a transaction relating to the program, and
(ii) computer programs embedded in goods and any supporting
information provided in connection with a transaction relating to the
program whether or not the program is associated with the goods in
such a manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires
a right to use the program in connection with the goods, and whether
or not the program is embedded in goods that consist solely of the
medium in which the program is embedded);
(v) all Intellectual Property;
(vi) Investment Property, including without limitation,
securities, securities entitlements, and financial assets, and
including without limitation, 100% of the outstanding capital voting
stock of each Domestic Subsidiary, and 65% of the outstanding capital
voting stock of each Foreign Subsidiary;
(vii) all General Intangibles, including without limitation, all
of Borrower's or all of each Domestic Subsidiary's rights to any tax
refunds from the Internal Revenue Services and proceeds thereof;
(viii) all Goods, Instruments, Documents, policies and
certificates of insurance, Deposit Accounts, money, Investment
Property or other property (except real property which is not a
fixture) which are
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 2
now or later in possession or control of Lender, or as to which Lender
now or later controls possession by documents or otherwise, and
(ix) all additions, attachments, accessions, parts,
replacements, substitutions, renewals, interest, dividends,
distributions, rights of any kind (including but not limited to stock
splits, stock rights, voting and preferential rights), products, and
proceeds of or pertaining to the above including, without limit, cash
or other property which were proceeds and are recovered by a
bankruptcy trustee or otherwise as a preferential transfer by
Borrower.
In the definition of Collateral, a reference to a type of collateral
shall not be limited by a separate reference to a more specific or narrower
type of that collateral. Capitalized terms not otherwise defined in this
Agreement shall have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the UCC, as those
meanings may be amended, revised or replaced from time to time.
"CURRENT RATIO" shall mean, as computed in accordance with GAAP, the
quotient of the Borrower's current assets divided by the sum of (i)
Borrower's current liabilities, and (ii) Indebtedness (to the extent not
duplicative).
"DEFAULT RATE" shall mean the Maximum Legal Rate.
"GUARANTOR" shall mean each Domestic Subsidiary, each Foreign
Subsidiary, and any other Person who from time to time guarantees any
portion of the Indebtedness.
"LOAN" shall mean a loan or Advance of funds by the Lender pursuant to
the Agreement, including without limitation, all funds advanced under the
Term Loan and the Revolving Credit Loan.
"NOTE" shall mean, collectively, the Revolving Credit Note and the
Term Note.
"REVOLVING CREDIT COMMITMENT" shall mean the obligation of the Lender
to make Revolving Credit Loans to the Borrower in an aggregate principal
amount at any time outstanding up to but not to exceed $2,500,000 from the
date of this Agreement through the Termination Date.
"REVOLVING CREDIT NOTE" shall mean that certain Amended and Restated
Revolving Credit Note dated as of March 29, 2002 in the amount of
$2,500,000 executed by the Borrower and payable to the order of the Lender,
as the same has been or may hereafter be amended, restated, extended,
increased, renewed or otherwise modified from time to time, and
substitutions therefor.
"SECURITY AGREEMENT" shall mean, collectively, that certain Security
Agreement executed by Borrower in favor of Lender dated as of December 1,
2001, as the same may be amended, restated, or otherwise modified from time
to
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 3
time, including without limitation, that certain Restated Security
Agreement executed by Borrower in favor of Lender dated as of March 29,
2002, and such other security agreements as from time to time may be
executed by the Borrower or any Guarantor for the benefit of Lender,
whether pursuant to this Agreement or otherwise.
"TERMINATION DATE" shall mean the maturity date of the Revolving
Credit Loan, which is December 3, 2003, subject to the early maturity
provisions of the Revolving Credit Note.
(b) The following defined terms are added to Section 1.1 of the
Agreement:
"ADVANCE FORMULA AGREEMENT" shall mean that certain Advance Formula
Agreement dated as of March 29, 2002, executed by the Borrower and
delivered to the Lender, as the same may be amended, restated or modified
from time to time.
"AMENDMENT FEE" has the meaning assigned to it in Section 9.16.
"BORROWING BASE CERTIFICATE" shall mean a certificate in the form of
EXHIBIT "A".
"CAPITAL EXPENDITURE" shall mean any expenditure by a Person for (a)
an asset which will be used in a year or years subsequent to the year in
which the expenditure is made and which asset is properly classified in
relevant financial statements of such Person as equipment, real property, a
fixed asset or a similar type of capitalized asset in accordance with GAAP
or (b) an asset relating to or acquired in connection with an acquired
business, and any and all acquisition costs related to (a) or (b) above.
"CASH FLOW" of any Person shall mean, for any applicable period of
determination, the sum of (a) the Net Income of such Person for such period
(after deduction for income taxes and other taxes of such Person determined
by reference to income or profits of such Person in the same period), plus
(b), to the extent deducted in the computation of such Net Income, the
amount of depreciation and amortization expense and deferred tax
liabilities of such Person for such period.
"CASH FLOW COVERAGE RATIO" of any Person shall mean, for any
applicable period of determination, the ratio of (a) the sum of Cash Flow
to (b) the sum of the aggregate amount of principal payments on Debt
(excluding principal payments on the Revolving Credit Loan) made by such
Person during such period.
"COMPLIANCE CERTIFICATE" shall mean a certificate to be furnished by
Borrower to Lender, in the form of EXHIBIT "B", certified by the chief
financial officer of Borrower (or in such officer's absence, another
responsible officer of Borrower) pursuant to SECTION 9.1.3 of this
Agreement, certifying that, as of the date thereof, no Default or Event of
Default shall have occurred and be
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 4
continuing, or if any Default or Event of Default shall have occurred and
be continuing, specifying in detail the nature and period of existence
thereof and any action taken or proposed to be taken by Borrower with
respect thereto, and also certifying as to whether Borrower is in
compliance with the financial covenants contained herein (which certificate
shall set forth, in reasonable detail, the calculations and the resultant
ratios and financial tests determined thereunder).
"COPYRIGHTS" shall mean any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished
and whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held, including without limitation
those set forth on EXHIBIT "C" attached hereto.
"CURRENT MATURITIES OF LONG TERM INDEBTEDNESS" shall mean, in respect
of a Person and as of any date of determination, that portion of Long Term
Indebtedness that should be classified as current in accordance with GAAP.
"DOMESTIC SUBSIDIARIES" shall mean, collectively, ▇▇▇▇▇▇ Group of
Sweden, Inc., a Delaware corporation, ▇▇▇▇▇▇ Group of Louisiana, Inc., a
Delaware corporation, and Interlink Technologies, Inc., an Ohio
corporation.
"FOREIGN SUBSIDIARIES" shall mean, collectively, ▇▇▇▇▇▇ Group GmbH,
▇▇▇▇▇▇ GROUP ASIA PTE LTD, ▇▇▇▇▇▇ Group Hong Kong Limited, ▇▇▇▇▇▇ Group
(Suisse) GmbH.
"INTELLECTUAL PROPERTY" shall mean, collectively, the following:
(i) All Copyrights;
(ii) Any and all trade secrets, and any and all Intellectual
Property rights in computer software and computer software products
nor or hereafter existing, created, acquired or held;
(iii) Any and all design rights which may be available now or
hereafter existing, created, acquired or held;
(iv) All Patents;
(v) All Trademarks;
(vi) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the
right, but not the obligation, to ▇▇▇ for and collect such damages for
said use or infringement of the Intellectual Property rights
identified above;
(vii) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from
such use to the extent permitted by such license or rights; and
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 5
(viii) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents.
"LONG TERM INDEBTEDNESS" shall mean, in respect of a Person and as of
any date of determination, all Debt (other than the aggregate outstanding
principal balance of all Revolving Loans) which should be classified as
"funded indebtedness" or "long term indebtedness" on a balance sheet of
such Person as of such date in accordance with GAAP.
"NET INCOME" shall mean the net income of a Person for any applicable
period of determination, determined in accordance with GAAP, but excluding,
in any event:
(i) any gains or losses on the sale or other disposition, not
in the ordinary course of business, of investments or fixed or capital
assets, and any taxes on the excluded gains and any tax deductions or
credits on account of any excluded losses; and
(ii) in the case of Borrower, net earnings of any Person in
which Borrower has an ownership interest, unless such net earnings
shall have actually been received by Borrower in the form of cash
distributions.
"PATENTS" shall mean all patents, patent applications and like
protections including, without limitation, improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of
the same, including without limitation the patents and patent applications
set forth on EXHIBIT "D" attached hereto.
"TERM LOAN" shall mean the single Advance Loan made, or to be made, by
Lender to or for the credit of Borrower not to exceed Five Million and
No/100 Dollars ($5,000,000) in the aggregate.
"TERM LOAN TERMINATION DATE" shall mean December 3, 2003, subject to
the early maturity provisions of the Term Note.
"TERM NOTE" shall mean that certain Variable Rate - Installment Note
dated March 29, 2002 in the original principal amount of $5,000,000
executed by Borrower, payable to the order of Lender as the same may be
renewed, extended, modified, increased or restated from time to time.
"THIRD AMENDMENT" means that certain Third Amendment to First Amended
and Restated Revolving Credit Loan Agreement dated as of March 29, 2002
executed by and among Borrower, Lender, and certain Guarantors described
therein.
"THIRD AMENDMENT EFFECTIVE DATE" means the "Effective Date," as such
term is defined in the Third Amendment.
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 6
"TRADEMARKS" shall mean any trademark or servicemark rights, whether
registered or not, applications to register and registrations of the same
and like protections, and the entire goodwill of the business of Borrower
connected with and symbolized by such trademarks, including without
limitation those set forth on EXHIBIT "E" attached hereto.
Section 2.3 ADDITION OF SECTION 2A. The following language is added to
the Agreement as Section 2A:
SECTION 2A. TERM LOAN
2.1 TERM LOAN COMMITMENT. On or before the Effective Date (as
defined in the Third Amendment), subject to the terms and conditions of
this Agreement and the other Loan Documents, the Lender agrees to make the
Term Loan available as a single advance to the Borrower. At the time of
borrowing the Term Loan, Borrower agrees to execute and deliver to Lender
the Term Note to evidence the Indebtedness of Borrower to Lender under and
in respect of the Term Loan.
2.2 REPAYMENT OF AND INTEREST ON TERM LOAN. The Indebtedness
from time to time outstanding under and evidenced by the Term Note shall
bear interest at the rate provided in the Term Note and all outstanding
principal and accrued and unpaid interest shall be payable as provided in
the Term Note. Borrower shall not be permitted to reborrow any amounts
repaid under the Term Note.
2.3 USE OF PROCEEDS OF TERM LOAN. All of the proceeds of the
Term Loan shall be used to repay a portion of the unpaid balance of the
Revolving Credit Loans as in existence immediately prior to the Term Loan
single Advance.
Section 2.4 AMENDMENTS TO PRICING. The LIBOR Rate and Cost of Funds
pricing option is no longer available to the Borrower. References to "LIBOR
Advances" "LIBOR Rate" "Costs of Funds Advances" and "Costs of Funds Rate" and
other similar language relating to Cost of Funds or LIBOR are deleted in their
entirety from the Agreement.
Section 2.5 DELETION OF SECTION 3, LETTERS OF CREDIT. The Lender's
commitment to issue Letters of Credit is hereby terminated and Section 3 is
hereby deleted in its entirety from the Agreement and replaced with the
following:
SECTION 3. LETTERS OF CREDIT. This Section 3 is intentionally
deleted. The Lender has no obligation to issue any letter of credit for the
benefit of Borrower or any of its Subsidiaries.
Section 2.6 AMENDMENTS TO SECTION 4.1, SECTION 4.2, AND SECTION 4.3.
Section 4.1, Section 4.2 and Section 4.3 of the Agreement are hereby amended and
restated in their entirety to read as follows:
4.1. INTEREST. The unpaid principal amount of the Advances shall
bear interest prior to the Term Loan Termination Date or the Termination
Date, as applicable, at a varying rate per annum equal from day to day to
the lesser of (a)
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 7
the Maximum Rate, or (b) the Applicable Rate. If at any time the Applicable
Rate for any Advance shall exceed the Maximum Legal Rate, thereby causing
the interest accruing on such Advance to be limited to the Maximum Legal
Rate, then any subsequent reduction in the Applicable Rate for such Advance
shall not reduce the rate of interest on such Advance below the Maximum
Legal Rate until the aggregate amount of interest accrued on such Advance
equals the aggregate amount of interest which would have accrued on such
Advance if the Applicable Rate had at all times been in effect. Accrued and
unpaid interest on the Advances shall be due and payable as provided in the
Term Note or Revolving Credit Note, as applicable. Notwithstanding the
foregoing, any outstanding principal of any Advance and (to the fullest
extent permitted by law) any other amount payable by the Borrower under
this Agreement or any other Loan Document that is not paid in full when due
(whether at stated maturity, by acceleration, or otherwise) shall bear
interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand.
4.2. BORROWING PROCEDURE.
(a) ADVANCES UNDER THE REVOLVING CREDIT LOANS. The Borrower
shall give the Lender notice by means of an Advance Request Form of each
requested Advance under the Revolving Credit Note on the same day (by 2:00
p.m. Dallas time) of the requested date of each Advance, specifying: (a)
the requested date of such Advance (which shall be a Business Day), and (b)
the amount of such Advance. The Lender at its option may accept telephonic
Advance requests by an Authorized Officer who provides the Lender with the
Security Code, provided that such acceptance shall not constitute a waiver
of the Lender's right to delivery of an Advance Request Form in connection
with subsequent Advances. Any telephonic request for an Advance by the
Borrower shall be promptly confirmed by submission of a properly completed
Advance Request Form to the Lender. Each Prime Rate Advance shall be in a
minimum principal amount of $50,000. Subject to the terms and conditions of
this Agreement, each Advance shall be made available to the Borrower by
depositing the same, in immediately available funds, in an account of the
Borrower maintained with the Lender at the principal office designated by
the Borrower. All notices under this Section shall be irrevocable and shall
be given not later than 2:00 P.M. Dallas, Texas time on the day which is
not less than the number of Business Days specified above for such notice.
(b) ADVANCES UNDER THE TERM LOAN. Subject to the satisfaction of
all conditions precedent set forth in the Third Amendment, the Lender shall
make the single Advance under the Term Loan and apply proceeds of the Term
Loan to the Revolving Credit Loan by 3:00 p.m. (Dallas, Texas time) on the
Effective Date of the Third Amendment.
4.3 CONVERSIONS AND CONTINUATIONS. This Section 4.3 is
intentionally deleted.
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 8
Section 2.7 AMENDMENT TO SECTION 4.8. Section 4.8 is hereby deleted in
its entirety from the Agreement and replaced with the following:
4.8 EARLY TERMINATION. The Lender, at its sole discretion and
upon at least ninety (90) days prior written notice to the Borrower, may
declare all of the principal balance and accrued and unpaid interest owing
on the Loans due and payable on April 30, 2003.
Section 2.8 DELETION OF SECTION 5, YIELD PROTECTION AND ILLEGALITY.
Section 5 is hereby deleted in its entirety from the Agreement and replaced with
the following:
SECTION 5 YIELD PROTECTION AND ILLEGALITY. This Section 5 is
intentionally deleted.
Section 2.9 AMENDMENT TO SECTION 9.1.3. Section 9.1.3 of the Agreement
is hereby amended and restated in its entirety as follows:
9.1.3 MONTHLY COMPLIANCE CERTIFICATE. Furnish to the Lender not
later than the twentieth (20th) day of each month (beginning May 20, 2002)
a Compliance Certificate, dated as of the end of the month immediately
prior to the due date for such Certificate, in a form acceptable to the
Lender in its sole discretion, evidencing the Borrower's compliance with
all financial covenants contained in the Agreement.
Section 2.10 ADDITION OF SECTION 9.1.8, SECTION 9.19 AND SECTION 9.20 The
following language is added to the Agreement as Section 9.1.8, Section 9.1.9,
and Section 9.1.10:
9.1.8 WEEKLY BORROWING BASE CERTIFICATE. Furnish to the Lender not
later than Wednesday of each week (beginning April 10, 2002) a Borrowing
Base Certificate, dated as of the end of the week immediately prior to the
due date for such Borrowing Base Certificate, in a form acceptable to the
Lender in its sole discretion.
9.1.9 ACCOUNTS RECEIVABLE AGINGS. Furnish to the Lender as soon as
available, and in any event within twenty (20) days after and as of the end
of each calendar month: (i) detailed agings and reports of accounts
receivable of Borrower and any Subsidiary acquiring accounts receivable
from the United States of America or Canada; and (ii) a summary of agings
and reports of accounts receivable of Borrower, consolidated.
9.1.10 OTHER REPORTS. Furnish to the Lender not later than the
twentieth (20th) day of each month (beginning April 15, 2002), a backlog
report of business under contract and other business development.
Section 2.11 AMENDMENTS TO SECTIONS 9.5 AND SECTION 9.7. The financial
covenants described in Section 9.5 and Section 9.7 of the Agreement are amended
and restated in their entirety as indicated below:
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 9
9.5 TANGIBLE NET WORTH. Maintain a Tangible Net Worth (excluding
the effect upon Tangible Net Worth of any income tax refunds received by
Borrower or any Subsidiary, and excluding from Debt all Subordinated Debt)
AT ALL TIMES of not less than the amount set forth below, to be tested at
or during the corresponding period set forth below:
PERIOD AMOUNT
------ ------
At April 30, 2002 $1,500,000
At May 31, 2002 $2,200,000
At June 30, 2002 and on the last day of $3,500,000
each month thereafter through
September 30, 2002
At October 31, 2002 $4,000,000
At November 30, 2002 $5,000,000
At December 31, 2002 $5,500,000
On January 31, 2003, and as of each month end thereafter, the Borrower's
Tangible Net Worth shall increase monthly by an amount equal to 75% of the
Borrower's Net Income for such calendar month computed in accordance with
GAAP (with no reduction to Tangible Net Worth, for purposes of this
covenant, for net losses and with no increases for income tax refunds).
9.7. CURRENT RATIO. Maintain AT ALL TIMES a Current Ratio of not
less than 1.0 to 1.0 from June 30, 2002 through September 30, 2002, and not
less than 1.1 to 1.0 at all times thereafter.
Section 2.12 DELETION OF SECTION 9.6, SECTION 9.8, SECTION 9.9. The
financial covenants described in Section 9.6, Section 9.8, and Section 9.9 of
the Agreement are each deleted in their entirety and replaced with the
following:
9.6. DEBT RATIO. This Section 9.6 is intentionally deleted.
9.8. FUNDED DEBT-TO-EARNINGS RATIO. This Section 9.8 is
intentionally deleted.
9.9 NET INTEREST EXPENSE RATIO. This Section 9.9 is
intentionally deleted.
Section 2.13 DELETION OF SECTION 9.13. Section 9.13 of the Agreement is
deleted in its entirety and replaced with the following:
9.13. UNUSED FACILITY FEE. This Section 9.13 is intentionally
deleted.
Section 2.14 ADDITION OF SECTIONS 9.14, 9.15, 9.16, 9.17, 9.18 AND 9.19.
Section 9.14, Section 9.15, Section 9.16, Section 9.17, Section 9.18 and Section
9.19 are each added to the Agreement as follows:
9.14 EQUITY. The Borrower will provide evidence satisfactory to
Lender of its receipt in good funds of unrestricted contributions to its
equity (or alternatively, from subordinated debt incurred on terms, and
pursuant to such
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 10
subordination agreements, satisfactory to Lender in its sole discretion) in
the following amounts no later than on the following respective dates:
DATE REQUIRED EQUITY OR SUBORDINATED DEBT
CONTRIBUTION BY SUCH DATE
April 5, 2002 $1,000,000
May 15, 2002 $1,000,000
June 30, 2002 $1,000,000
9.15 LEGAL OPINIONS. No later than April 22, 2002 (with regard to
legal opinions relating to the pledge of stock of Domestic Subsidiaries)
and no later than June 3, 2002 (with regard to legal opinions relating to
the pledge of stock of Foreign Subsidiaries), the Borrower will provide to
Lender, addressed to Lender, legal opinions in content satisfactory to
Lender in its sole discretion from foreign and U.S. counsel acceptable to
Lender, advising Lender (a) that the pledge of stock of the Domestic
Subsidiaries and the Foreign Subsidiaries has been duly authorized by all
necessary corporate and shareholder action, (b) that the pledged shares, as
evidenced by the stock certificates delivered for pledge to Lender,
represent all of the issued and outstanding capital voting stock of each
respective Subsidiary, (c) that such pledge transactions perfect a security
interest in such pledged stock and are valid, binding and enforceable
against the pledgor in such transactions under (i) the laws of the State of
Texas and applicable laws of the United States, (ii) the laws of the state
(or country) of organization of each entity whose stock is pledged, and (d)
in the case of Foreign Subsidiaries, (i) that no registration of the pledge
transaction is required under the laws of the country of organization for
each respective Foreign Subsidiary, (ii) that the choice of law provisions
in each respective Pledge Agreement will be upheld under the laws of the
jurisdiction of organization for each Foreign Subsidiary. All foreign
counsel opinions must be furnished by counsel licensed to practice law in
the jurisdiction of organization for the respective Foreign Subsidiary to
which such counsel's opinion relates. Should Lender determine in its sole
discretion that all steps necessary to perfect Lender's security interest
in such pledged stock have been satisfied, and that all the terms described
in this Section 9.15 have been satisfied, then the Lender agrees that it
shall execute documentation releasing each Foreign Subsidiary from its
obligations under each of their respective Guaranties.
9.16 AMENDMENT FEE. The Borrower shall pay to the Lender for the
account of the Lender an amendment fee in connection with the execution of
the Third Amendment in the amount of $150,000, of which $75,000 shall be
paid on September 15, 2002, and of which $75,000 shall be paid on December
15, 2002 (the "AMENDMENT FEE").
9.17 ADDITIONAL GUARANTORS. Upon the creation or acquisition of
any new Subsidiary (the "NEW SUBSIDIARY") at any time after the Third
Amendment Effective Date, the Borrower shall cause the owner of stock of
each New Subsidiary to execute a Security Agreement (or an amendment to an
existing Security Agreement) in favor of the Lender, pledging 100% of the
capital voting stock of such New Subsidiary should such New Subsidiary be
incorporated or
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 11
formed under the laws of the United States, or pledging 65% of the capital
voting stock of such New Subsidiary should such New Subsidiary be
incorporated or formed under the laws of any nation other than the United
States. Further, upon the creation of any New Subsidiary incorporated or
formed under the laws of the United States, such New Subsidiary shall
execute a Security Agreement in favor of the Lender, pledging all tangible
and intangible assets of such New Subsidiary as Collateral for the Loan.
Nothing contained in this Section 9.17 shall alter the requirements
contained in Section 10.1 hereof.
9.18 CASH FLOW COVERAGE RATIO. Borrower will maintain a Cash Flow
Coverage Ratio of not less than 2.0 to 1.0 at each of the following
respective testing dates, for the respective periods covered as of each
such testing date:
PERIOD COVERED/TESTING DATE
---------------------------
One-month period ending October 31, 2002
Two-month period ending November 30,2002
Three-month period ending December 31, 2002
Four-month period ending January 31, 2003
Five-month period ending February 28, 2003
Six-month period ending March 31, 2003
Seven-month period ending April 30, 2003
Eight-month period ending May 31, 2003
Nine-month period ending June 30, 2003
Ten-month period ending July 31, 2003
Eleven-month period ending August 31, 2003
Twelve-month period ending September 30, 2003
Twelve-month period ending October 31, 2003
Twelve-month period ending November 30, 2003
9.19 FURTHER ASSURANCES. At any time and from time to time, upon
the request of the Lender, and at the sole expense of the Borrower, the
Borrower shall promptly execute and deliver all such further instruments,
agreements, and documents and take such further action as the Lender may
deem necessary or desirable to preserve and perfect its security interest
in the Collateral and carry out the provisions and purposes of this
Amendment. Without limiting the generality of the foregoing, the Borrower
shall (a) execute and deliver to the Lender such financing statements as
the Lender may from time to time require; and (b) execute and deliver to
the Lender such other documents, instruments, and agreements as the Lender
may reasonably require to perfect and maintain the validity, effectiveness,
and priority of the Loan Documents and the liens intended to be created
thereby. The Borrower authorizes the Lender to file one or more financing
or continuation statements, and amendments thereto, relating to all or any
part of the Collateral without the signature of the Borrower where
permitted by law. A carbon, photographic, or other reproduction of this
Amendment or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
Section 2.15 DELETION OF SECTION 10.13. The financial covenant described
in Section 10.13 of the Agreement is deleted in its entirety and replaced with
the following:
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 12
10.13. CAPITALIZED SOFTWARE COST LIMITATION. This Section 10.13 is
intentionally deleted.
Section 2.16 AMENDMENT TO SECTION 10.14. The financial covenant described
in Section 10.14 of the Agreement is amended and restated in its entirety as
indicated below:
10.14 CONSECUTIVE LOSSES. Commencing on July 1, 2002, permit any
"Loss" to exist on a rolling two-quarter basis, to be tested at the end of
each quarter beginning with the quarter ending December 31, 2002. For
purposes of this covenant, "Loss" shall mean as of any date of computation
any negative number resulting from the computation of net income for the
previous two calendar quarters, as computed in accordance with GAAP
(excluding within the computation of net income all extraordinary and
non-recurring charges to income).
Section 2.17 ADDITION OF SECTION 10.15 AND SECTION 10.16. Section 10.15
and Section 10.16 are added to the Agreement as follows:
10.15 CAPITAL EXPENDITURES. At no time permit the aggregate amount
of all Capital Expenditures made during any fiscal years (commencing with
Borrower's 2002 fiscal year) to exceed $300,000.
10.16 DIVIDENDS. Declare or pay dividends on, or make any other
distribution (whether by reduction of capital or otherwise) in respect of
any shares of its capital stock or other ownership interests, except (a)
dividends payable by a Subsidiary of Borrower to Borrower; (b) dividends
payable solely in stock; and (c) the redemption, repurchase or acquisition
of any shares of its capital stock payable upon an employee's termination
pursuant to its employee stock option, repurchase, or similar plan;
provided, however, that after giving effect to such redemption, repurchase
or acquisition, the Borrower or the Subsidiary, as applicable, shall be in
full compliance with the terms of the Agreement.
Section 2.18 ADDITION OF SECTION 11.1.10, 11.1.11, 11.1.12 AND 11.1.13.
Section 11.1.10, Section 11.1.11, Section 11.1.12 and Section 11.1.13 are added
to the Agreement as follows:
11.1.10 AMENDMENT FEE. If the Borrower fails to pay any portion of
the Amendment Fee described in Section 9.16 hereof on the date that such
portion is due and payable pursuant to Section 9.16 hereof.
11.1.11 DELIVERY OF STOCK CERTIFICATES AND STOCK POWERS. If the
Borrower fails to deliver to the Lender stock certificates and blank stock
powers with respect to the stock being pledged (to the extent such stock is
certificated) by each (i) Domestic Subsidiary no later than April 15th,
2002, and (ii) Foreign Subsidiary no later than May 15, 2002.
11.1.12 PERFECTION OF STOCK. Failure to deliver such control
agreements or other agreements, or take any reasonable actions, as Lender
in its sole discretion deems necessary for Lender to obtain a first
priority security interest in
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 13
the pledge of 100% of the capital voting stock of each respective Domestic
Subsidiary and in the pledge of 65% of the capital voting stock of each
respective Foreign Subsidiary.
11.1.13 SUBORDINATION AGREEMENT. Any default or event of default
under any Subordinated Debt, including without limitation, default by
reason of nonpayment of principal or interest.
Section 2.19 ADDITION OF SECTION 12.20 AND SECTION 12.21. Section 12.20
and Section 12.21 are added to the Agreement as follows:
12.20 AUDITS OF COLLATERAL; FEES. Lender shall have the right from
time to time to audit Accounts, Inventory, and other Collateral pledged by
Borrower, any Domestic Subsidiary or any Foreign Subsidiary, provided that
such audits will be conducted no more than three (3) times in any fiscal
year unless an Event of Default has occurred. Borrower agrees to reimburse
Lender, on demand, for customary and reasonable fees and costs incurred by
Lender for such audits and for each appraisal of Collateral and financial
analysis and examination of Borrower or any Subsidiary performed from time
to time. After the audit conducted in March of 2002 (the expense of which
will approximate $9,000), the costs and expenses associated with any
additional audit conducted at a future time shall be capped at $4000 for
any individual audit.
12.21 NEGATIVE PLEDGE. Except for liens in favor of Lender, the
Borrower, each Domestic Subsidiary, and each Foreign Subsidiary hereby
represents, warrants and certifies to Lender that, without the prior
written consent of Lender, it will not, from and after the date hereof,
permit any lien to exist against any of its respective assets. Further, the
Borrower, each Domestic Subsidiary, and each Foreign Subsidiary hereby
represent, warrant and certify to Lender that it will not otherwise grant,
transfer, convey, assign, pledge, mortgage, hypothecate or otherwise
dispose of or encumber, either absolutely or conditionally, any of its
rights, titles, liens or other interests in any of its respective assets.
The rights and powers given in this Section 12.21 may be transferred and
assigned by Lender, in whole or in part, at such time and upon such terms
as it may deem advisable and the assigns shall succeed to such rights and
powers of Lender hereunder as may be so assigned.
ARTICLE III
LIMITED WAIVER
Borrower has informed the Lender that certain Defaults have occurred under
the Agreement solely by reason of the following (hereinafter collectively
referred to as the "EXISTING SPECIFIED DEFAULTS"):
(a) Borrower's failure to comply with the Tangible Net Worth
financial covenant described in Section 9.5 of the Agreement as of December
31, 2001, January 31, 2002, and February 28, 2002;
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 14
(b) Borrower's failure to comply with the Debt Ratio financial
covenant described in Section 9.6 of the Agreement as of December 31, 2001,
January 31, 2002, and February 28, 2002;
(c) Borrower's failure to comply with the Current Ratio
financial covenant described in Section 9.7 of the Agreement as of December
31, 2001, January 31, 2002, and February 28, 2002;
(d) Borrower's failure to comply with the Funded
Debt-to-Earnings Ratio financial covenant described in Section 9.8 of the
Agreement as of December 31, 2001, January 31, 2002, and February 28, 2002;
(e) Borrower's failure to comply with the Net Interest Expense
Ratio financial covenant described in Section 9.9 of the Agreement as of
December 31, 2001, January 31, 2002, and February 28, 2002;
(f) Borrower's failure to comply with the Capitalized Software
Cost Limit financial covenant described in Section 10.13 of the Agreement
as of December 31, 2001, January 31, 2002, and February 28, 2002; and
(g) Borrower's failure to comply with the Consecutive Losses
financial covenant described in Section 10.14 of the Agreement as of
December 31, 2001, January 31, 2002, and February 28, 2002.
By execution of this Amendment, the Lender hereby waives the Existing
Specified Defaults through the reporting period ending March 31, 2002. Except as
otherwise specifically provided for in this Article III, nothing contained
herein shall be construed as a waiver by the Lender of any covenant or provision
of the Agreement, the other Loan Documents, this Amendment, or of any other
contract or instrument among Borrower, any Guarantor, and the Lender, and the
failure of the Lender at any time or times hereafter to require strict
compliance by Borrower of any provision thereof shall not waive, affect or
diminish any right of the Lender to thereafter demand strict compliance
therewith. The Lender hereby reserves all rights granted under the Agreement,
the other Loan Documents, this Amendment and any other contract or instrument
among Borrower, any Guarantor, and the Lender.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 CONDITIONS. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent:
(a) Lender shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to the Lender:
(i) this Amendment executed by the Borrower, the Lender,
each Domestic Subsidiary, and each Foreign Subsidiary;
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 15
(ii) the Amended and Restated Revolving Credit Note in the
amount of $2,500,000 executed by Borrower and payable to the order
of the Lender;
(iii) the Term Note in the amount of $5,000,000 executed by
the Borrower and payable to the order of the Lender;
(iv) the Restated Security Agreement executed by the
Borrower in favor of the Lender, pledging all tangible and
intangible assets of Borrower as Collateral for the Loan;
(v) Security Agreements executed by each Domestic
Subsidiary Borrower in favor of the Lender, pledging all tangible
and intangible assets of each respective Domestic Subsidiary as
Collateral for the Loan;
(vi) Security Agreement (Intellectual Property) executed
by Borrower in favor of the Lender, pledging all Intellectual
Property as more particularly described therein;
(vii) the Security Interest Assignment of Copyrights,
Patents, and Trademarks executed by the Borrower in favor of the
Lender;
(viii) the Guaranty Agreement executed by Interlink
Technologies, Inc.;
(ix) the Security Agreement (Negotiable Collateral)
executed by the Borrower in favor of the Lender, pledging 100%
capital voting stock of each respective Domestic Subsidiary; and
pledging 65% of the capital voting stock of each respective Foreign
Subsidiary, as Collateral for the Loan;
(x) the Advance Formula Agreement executed by the
Borrower;
(xi) Borrower and each applicable Domestic Subsidiary
shall pledge all reserves, cash, cash deposits, or other cash
equivalents held for purposes of funding deferred compensation
obligations under non-qualified plans (meaning deferred
compensation plans not qualified under Section 401 of the Internal
Revenue Code, as amended from time to time);
(xii) Resolutions of the Board of Directors of the Borrower
certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery, and performance by the Borrower
of this Amendment, the Revolving Credit Note, the Term Note, the
Security Agreements, and other Loan Documents executed in
connection herewith;
(xiii) Resolutions of the Board of Directors of each
Domestic Subsidiary and each Foreign Subsidiary certified by its
Secretary or an Assistant Secretary which authorize the execution,
delivery, and performance by each Domestic Subsidiary and each
Foreign Subsidiary of this Amendment, each Security Agreement, and
other Loan Documents executed in connection herewith; and
(xiv) such other documents, instruments, and agreements as
Lender may require, including without limitation, any documents
necessary to create dominion
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 16
of funds accounts and lock box arrangements and any documents
deemed necessary by the Lender in connection with the Borrower's
pledge and assignment of all tax refunds to Lender, including
without limitation IRS Power of Attorney, Form 2848.
(b) No Default or Event of Default (other than the Existing
Specified Defaults) shall have occurred and be continuing;
(c) All of the representations and warranties contained in
Article V of the Agreement, as amended hereby and in the other Loan
Documents, shall be true and correct on and as of the date of this
Amendment with the same force and effect as if such representations and
warranties had been made on and as of such date, except to the extent such
representations and warranties speak to a specific date or the existence of
the Existing Specified Defaults.
ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 5.1 RATIFICATIONS GENERALLY. The terms and provisions set forth
in this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Agreement and except as expressly modified and
superseded by this Amendment, the terms and provisions of the Agreement and any
notes relating hereto, the Loan Documents, and all other documents executed in
connection with the Agreement are hereby ratified and confirmed and shall
continue in full force and effect. Borrower, each Guarantor, and Lender agree
that the Agreement, as amended hereby, the other Loan Documents, as amended
hereby, and all other documents executed in connection with the Agreement or
this Amendment to which Borrower or any Guarantor is a party shall continue to
be legal, valid, binding and enforceable in accordance with their respective
terms.
Section 5.2 RATIFICATIONS BY GUARANTORS. Each Guarantor hereby ratifies
and reaffirms all of such Guarantor's obligations under such Guarantor's
respective Guaranty and acknowledges that such Guarantor's respective Guaranty
is not subject to any claims, defenses or offsets. Each Guarantor also hereby
agrees that nothing contained in the Agreement and the Loan Documents, as hereby
amended, shall adversely affect any right or remedy of the Lender under the
Guaranties and that the execution and delivery of this Amendment and the Loan
Documents shall in no way change or modify such Guarantor's obligations under
such Guarantor's respective Guaranty and shall not constitute a waiver by the
Lender of any of its rights against such Guarantor.
Section 5.3 REPRESENTATIONS AND WARRANTIES. Borrower and each Guarantor
hereby represent and warrant to Lender that (a) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
action on the part of the Borrower and each Guarantor and will not violate the
certificate of incorporation or bylaws of the Borrower or any Guarantor, or
otherwise violate any other agreement to which Borrower or any Guarantor or any
of their respective properties is bound, (b) the certificate of incorporation
and bylaws of Borrower and each Guarantor has not been amended or revoked since
the date of the Agreement and each of the Borrower's and each Guarantor's
certificate of incorporation and bylaws is in full
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 17
force and in effect, and (c) the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Documents executed in
connection therewith or herewith are true and correct on and as of the date
hereof as though made on and as of the date hereof except to the extent such
representations and warranties speak to a specific date or the existence of the
Existing Specified Defaults, (d) except for the Existing Specified Defaults, no
Default has occurred and is continuing, and (e) except for the Existing
Specified Defaults, Borrower is in full compliance with all covenants and
agreements contained in the Agreement as amended hereby.
ARTICLE VI
MISCELLANEOUS
Section 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment or any other document
executed in connection herewith shall survive the execution and delivery of this
Amendment, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them.
Section 6.2 REFERENCE TO AGREEMENT. Each of the Agreement, the other
Loan Documents and any and all other agreements, documents, or instruments now
or hereafter executed and delivered pursuant to the terms hereof or pursuant to
the terms of the Agreement as amended hereby, are hereby amended so that any
reference in such documents to the Agreement and the other Loan Documents shall
mean a reference to the Agreement and the other Loan Documents, each as amended
hereby.
Section 6.3 EXPENSES OF LENDER. As provided in the Agreement, Borrower
(and each Guarantor) agrees to pay on demand all reasonable costs and expenses
incurred by Lender in connection with the preparation, negotiation, and
execution of this Amendment and any other documents executed pursuant hereto and
any and all amendments, modifications, and supplements thereto, including
without limitation the costs and reasonable fees of Lender's legal counsel, and
all costs and expenses incurred by Lender in connection with the enforcement or
preservation of any rights under the Agreement, as amended hereby, or any other
document executed in connection therewith, including without limitation the
costs and reasonable fees of Lender's legal counsel.
Section 6.4 SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 6.5 APPLICABLE LAW. This Amendment and all other documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Dallas, Dallas County,
Texas and shall be governed by and construed in
accordance with the laws of the State of
Texas.
Section 6.6 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of Lender, Borrower and its successors and assigns,
except Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of Lender.
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 18
Section 6.7 NO WAIVER. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant, condition or duty
by any Borrower or any obligated party shall be deemed a consent or waiver to or
of any other future breach of the same or any other covenant, condition or duty.
Section 6.8 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 6.9 COUNTERPARTS; FACSIMILES. This Amendment may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Further, any
facsimile copy, other copy or reproduction of a signed counterpart original of
this Amendment shall be as fully effective and binding as the original signed
counterpart of this Amendment.
Section 6.10 RELEASE AND COVENANT NOT TO ▇▇▇. BORROWER AND EACH GUARANTOR
(IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS) (THE "RELEASING
PARTIES") JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND FOREVER DISCHARGE LENDER
AND ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND
AGENTS, AND ATTORNEYS (THE "RELEASED PARTIES"), TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE
RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS,
DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS,
BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF
ANY NATURE, TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE AGAINST THE
RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, GROSS NEGLIGENCE,
USURY, FRAUD, DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS,
ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS
RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION,
CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF
COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN
PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND
REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL
AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS
VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF
ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE
OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF
GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER OR
NOT IN CONNECTION WITH OR RELATED TO THE LOAN DOCUMENTS AND THIS AGREEMENT, AT
LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED
OR UNSUSPECTED UP TO
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 19
AND INCLUDING THE DATE OF THIS AGREEMENT (THE "RELEASED CLAIMS"). THE RELEASING
PARTIES FURTHER AGREE TO LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY
CLAIM OR CAUSE OF ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES,
DAMAGES ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES ATTRIBUTABLE TO
MENTAL ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING, AND THE
RELEASING PARTIES DO HEREBY WAIVE AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO
ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME AGAINST ANY
OF THE RELEASED PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO
FACTS EXIST WHICH COULD PRESENTLY OR IN THE FUTURE COULD SUPPORT THE ASSERTION
OF ANY OF THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES. THE RELEASING
PARTIES FURTHER COVENANT NOT TO ▇▇▇ THE RELEASED PARTIES ON ACCOUNT OF ANY OF
THE RELEASED CLAIMS, AND EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY HAVE IN
CONNECTION WITH THEIR DEBTS AND OBLIGATIONS UNDER THE LOAN DOCUMENTS AND THIS
AGREEMENT. THIS PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY
OTHER RELEASE, COVENANT NOT TO ▇▇▇, OR WAIVER BY THE RELEASING PARTIES IN FAVOR
OF THE RELEASED PARTIES.
Section 6.11 INDEMNIFICATION. BORROWER AND EACH GUARANTOR HEREBY AGREE TO
INDEMNIFY, DEFEND AND SAVE LENDER HARMLESS FROM ANY AND ALL CLAIMS, LOSSES,
COSTS, DAMAGES, LIABILITIES, OBLIGATIONS AND EXPENSES, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES (WHETHER INSIDE OR OUTSIDE COUNSEL IS
USED), INCURRED BY LENDER BY REASON OF ANY DEFAULT OR EVENT OF DEFAULT, IN
COMMERCIALLY REASONABLE ACTIONS TO DEFEND OR PROTECT THE LIENS WHICH SECURE OR
PURPORT TO SECURE ALL OR ANY PORTION OF THE INDEBTEDNESS, WHETHER EXISTING UNDER
ANY LOAN DOCUMENTS OR OTHERWISE OR THE PRIORITY THEREOF, OR IN COMMERCIALLY
REASONABLE ACTS TO ENFORCE THE OBLIGATIONS OF BORROWER, ANY GUARANTOR, OR ANY
OTHER PERSON UNDER OR PURSUANT TO ANY LOAN DOCUMENT, OR IN THE PROSECUTION OR
DEFENSE OF ANY ACTION OR PROCEEDING CONCERNING ANY MATTER GROWING OUT OF OR
CONNECTED WITH THE COLLATERAL OR ANY LOAN DOCUMENTS, INCLUDING ANY CLAIMS,
LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES RESULTING FROM
LENDER'S OWN NEGLIGENCE, EXCEPT AND TO THE EXTENT BUT ONLY TO THE EXTENT CAUSED
BY LENDER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 6.12 ENTIRE AGREEMENT. THE AGREEMENT, THIS AMENDMENT AND ALL
OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THE AGREEMENT OR THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 20
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 21
Executed as of the date first written above.
BORROWER:
▇▇▇▇▇▇ GROUP, INC., a Delaware corporation
By:
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer, Vice President
DOMESTIC SUBSIDIARIES:
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC.
By:
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Secretary
▇▇▇▇▇▇ GROUP OF SWEDEN, INC.
By:
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Managing Director
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 22
JOINDER
By execution of this Joinder each Foreign Subsidiary hereby expressly (i)
acknowledges and accepts the terms of this Amendment, (ii) affirms the
representations and warranties attributable to each of them in Section 5.3 of
the Amendment, (iii) ratifies and affirms its obligations under its respective
Guaranty Agreement in favor of the Lender (as amended, supplemented or otherwise
modified the "Guaranty Agreement"), as provided in Section 5.2 of the Amendment,
(iv) acknowledges, renews and extends its continued liability under its Guaranty
Agreement and agrees that its Guaranty Agreement remains in full force and
effect, as provided for in Section 5.2 of the Amendment; and (iv) guarantees to
the Lender to promptly pay when due all amounts owing or to be owing by it under
its Guaranty Agreement pursuant to the terms and conditions thereof.
FOREIGN SUBSIDIARIES:
▇▇▇▇▇▇ GROUP ASIA PTE LTD
By:
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇
Director
▇▇▇▇▇▇ GROUP GMBH
By:
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
-------------------------------
▇▇▇▇▇▇ GROUP HONG KONG LIMITED
By:
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇
Director
▇▇▇▇▇▇ GROUP (SUISSE) GMBH
By:
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
-------------------------------
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 23
LENDER:
COMERICA BANK-
TEXAS
By:
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
THIRD AMENDMENT TO CREDIT AGREEMENT - Page 24
EXHIBIT A
BORROWING BASE CERTIFICATE
EXHIBIT B
COMPLIANCE CERTIFICATE
EXHIBIT C
COPYRIGHTS
EXHIBIT D
PATENTS
EXHIBIT E
TRADEMARKS
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$2,500,000.00 Dallas, Texas March 29, 2002
FOR VALUE RECEIVED, ▇▇▇▇▇▇ GROUP, INC., a Delaware corporation (the
"MAKER"), promises to pay to the order of COMERICA BANK-TEXAS (the "BANK ") at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, on the Termination Date (unless sooner due
under the terms of the Loan Agreement, as such terms are defined below), an
aggregate principal sum of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00) or, if less, the aggregate unpaid principal sum shown on the
schedule which, at the sole option of the Bank, may be attached hereto and made
a part hereof.
Reference is made to that certain First Amended and Restated
Revolving
Credit Loan Agreement, dated as of December 4, 1996, between the Maker and the
Bank (as the same has been or may be amended, restated or modified from time to
time, the "LOAN AGREEMENT "). Unless otherwise defined herein, capitalized terms
herein shall have the meanings given such terms in the Loan Agreement.
This Note is the Revolving Credit Note referred to in the Loan Agreement.
Interest shall accrue on the unpaid principal balance of this Note and be paid
at the lesser of the (a) Maximum Legal Rate (as later defined) or (b) the
Applicable Rate. Notwithstanding the foregoing, (i) upon the occurrence of an
Event of Default, or (ii) after the Termination Date (whether by acceleration or
otherwise), interest on the unpaid principal balance of this Note shall accrue
and be paid at the Default Rate. Interest shall be payable on the first day of
each month, commencing April 1, 2002, and continuing on the same day of each
successive month thereafter up to and including the Termination Date (whether by
acceleration or otherwise) and, from and after such Termination Date, on demand.
The entire principal balance of this Note remaining unpaid and all accrued but
unpaid interest shall be due and payable in full on the Termination Date (unless
otherwise due by acceleration). Reference is hereby made to the Loan Agreement
for a statement of the other terms and conditions of the Note, including those
conditions under which this Note may be accelerated.
In any calendar year, upon ninety (90) days prior written notice given by
the Bank to the undersigned, the entire principal balance remaining unpaid and
all accrued and unpaid interest owing herein shall become immediately due and
payable at the option of the holder of this Note on April 30, 2003. This
mandatory prepayment option shall continue regularly and annually thereafter
until the earlier of (i) the exercise of such mandatory prepayment option by the
holder of this Note, or (ii) the Termination Date.
A late payment charge equal to a reasonable amount not to exceed 5% of each
late payment may be charged on any payment not received by the Bank within 10
calendar days after the payment due date, but acceptance of payment of this
charge shall not waive any Default or Event of Default under this Note or the
Loan Documents.
If an Event of Default (as defined in the Loan Agreement) occurs and is not
cured within the time, if any, provided for by the Loan Agreement and is
continuing, the Bank may exercise any one or more of the rights (including the
right to accelerate this Note and any other
Indebtedness, as defined in the Loan Agreement) and remedies granted by the Loan
Agreement. Without limitation, if an Event of Default occurs and is not cured
within the time, if any, provided for by the Loan Agreement, then the Bank, upon
the occurrence and continuance of any such Event of Default, or after the
expiration of any time provided for cure, may at its option and without prior
notice to the Maker declare the principal of and interest on this Note to be
immediately due and payable and may set off against the principal of and
interest on this Note (i) any amount owing by the Bank to the Maker (ii) any
property of the Maker in the possession of the Bank and (iii) any amount in any
deposit account of the Maker with the Bank.
No agreements, conditions, provisions or stipulations contained in this
Note or in any other agreement between the Maker and the Bank, or the occurrence
of an Event of Default, or the exercise by the Bank of the right to accelerate
the payment of the maturity of principal and interest, or to exercise any option
whatsoever contained in this Note or any other agreement between the Maker and
the Bank, or the arising of any contingency whatsoever, shall entitle the Bank
to collect, in any event, interest exceeding the maximum rate of nonusurious
interest allowed from time to time by applicable state or federal laws as now or
as may hereinafter be in effect (the "MAXIMUM LEGAL RATE") and in no event shall
the Maker be obligated to pay interest exceeding such Maximum Legal Rate, and
all agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel the Maker to pay a
rate of interest exceeding the Maximum Legal Rate shall be without binding force
or effect, at law or in equity, to the extent only of the excess of interest
over such Maximum Legal Rate. In the event any interest is charged in excess of
the Maximum Legal Rate (the "EXCESS"), the Maker acknowledges and stipulates
that any such charge shall be the result of an accidental and bona fide error,
and such Excess shall be, first, applied to reduce the principal of any
obligations due, and, second, returned to the Maker, it being the intention of
the parties hereto not to enter at any time into an usurious or otherwise
illegal relationship. The parties hereto recognize that with fluctuations in the
prime commercial interest rate from time to time announced by the Bank such an
unintentional result could inadvertently occur. By the execution of this Note,
the Maker covenants that (a) the credit or return of any Excess shall constitute
the acceptance by the Maker of such Excess, and (b) the Maker shall not seek or
pursue any other remedy, legal or equitable, against the Bank based, in whole or
in part, upon the charging or receiving of any interest in excess of the Maximum
Legal Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by the Bank, all interest at any time
contracted for, charged or received by the Bank in connection with the Maker's
obligations shall be amortized, prorated, allocated and spread in equal parts
during the entire term of this Note. If at any time the rate of interest payable
hereunder shall be computed on the basis of the Maximum Legal Rate, any
subsequent reduction in the Contract Rate shall not reduce such interest
thereafter payable hereunder below the amount computed on the basis of the
Maximum Legal Rate until the aggregate amount of such interest accrued and
payable under this Note equals the total amount of interest which would have
accrued if such interest had been at all times computed solely on the basis of
the Contract Rate.
Unless preempted by federal law, the rate of interest from time to time in
effect hereunder shall not exceed the applicable weekly ceiling from time to
time in effect under Chapter 303 of the Texas Finance Code as amended or
succeeded.
-2-
The provisions of this Note governing interest shall be deemed to be
incorporated into every document or communication relating to the obligations
which sets forth or prescribes any account, right or claims or alleged account,
right or claim of the Bank with respect to the Maker (or any other obligor in
respect of the obligations), whether or not any provisions of this Note are
referred to therein. All such documents and communications and all figures set
forth therein shall, for the sole purpose of computing the extent of the
obligations asserted by the Bank thereunder, be automatically recomputed by the
Maker or any other obligor, and by any court considering the same, to give
effect to the adjustments or credits required by this Note.
If the applicable state or federal law is amended in the future to allow a
greater rate of interest to be charged under this Note than is presently allowed
by applicable state or federal law, then the limitation of interest hereunder
shall be increased to the maximum rate of interest allowed by applicable state
or federal law, as amended, which increase shall be effective hereunder on the
effective date of such amendment, and all interest charges owing to the Bank by
reason thereof shall be payable upon demand.
The provisions of Chapter 346 of the Texas Finance Code (formerly Chapter
15 of the Texas Credit Code (Vernon's Texas Civil Statutes), Article 5069-15),
as amended, are specifically declared by the parties hereto not to be applicable
to this Note or any of the other agreements executed in connection herewith or
therewith or to the transactions contemplated hereby or thereby.
Except as provided for in the Loan Agreement, the Maker and all guarantors
and endorsers (i) waive presentment, demand, protest and notice of dishonor,
(ii) agree that no extension or indulgence to the Maker or release or
nonenforcement of any security, whether with or without notice, shall affect the
obligations of any guarantor or endorser, and (iii) agree to reimburse the
holder of this Note for any and all costs and expenses (including, but not
limited to, reasonable attorney fees) incurred in collecting or attempting to
collect any and all principal of and interest on this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of Texas and applicable federal laws. THE MAKER, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY AND ALL ACTIONS AND PROCEEDINGS AT ANY TIME IN WHICH
THE MAKER AND THE BANK ARE PARTIES ARISING OUT OF THIS NOTE, THE LOAN AGREEMENT,
ANY LOAN DOCUMENTS OR ANY OTHER AGREEMENT RELATING TO THE FOREGOING DOCUMENTS.
This Note is given in amendment, restatement and modification of (but not
as an extinguishment of, substitution for or novation of) that certain Revolving
Credit Note dated December 1, 2001, in the original principal amount of
$10,000,000, executed by ▇▇▇▇▇▇ Group, Inc. and payable to the order of the
Bank.
[Remainder of this page intentionally left blank]
-3-
IN WITNESS WHEREOF, the Maker has executed this Note as of the first date
indicated above.
▇▇▇▇▇▇ GROUP, INC.
By:
-----------------------
Name:
Title:
[COMERICA LOGO] VARIABLE RATE-INSTALLMENT NOTE
AMOUNT NOTE DATE MATURITY DATE TAX IDENTIFICATION NUMBER
$5,000,000.00 March 29, 2002 December 3, 2003 ▇▇-▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA
BANK-TEXAS, a Texas banking association ("Bank"), at any office of the Bank in
the State of Texas, Five Million and No/100 Dollars (U.S. $5,000,000) (in
installments of $200,000 each plus interest on the unpaid balance from the date
of this Note at a per annum rate equal to the lesser of (a) the Maximum Rate, as
later defined, or (b) the Stated Rate, as later defined, until maturity, whether
by acceleration or otherwise. If on any day the Stated Rate shall exceed the
Maximum Rate for that day, the rate of interest applicable to this Note shall be
fixed at the Maximum Rate on that day and on each day thereafter until the total
amount of interest accrued on the unpaid principal balance of this Note equals
the total amount of interest which would have accrued if there had been no
Maximum Rate. Subject to the limitations hereinbelow set forth, interest shall
be calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year if this Note evidences a business or commercial loan.
The Stated Rate shall mean the Bank's "prime rate," which is the annual rate of
interest so designated by the Bank and which is changed by the Bank from time to
time, plus four percent (4%). Interest rate changes will be effective for
interest computation purposes as and when the Maximum Rate or the Stated Rate,
as applicable, changes.
Reference is made to that certain First Amended and Restated
Revolving Credit
Loan Agreement, dated as of December 4, 1996, between the undersigned and the
Bank (as the same has been or may be amended, restated or modified from time to
time, the "LOAN AGREEMENT"). Unless otherwise defined herein, capitalized terms
herein shall have the meanings given such terms in the Loan Agreement. This Note
is the Term Note referred to in the Loan Agreement.
Notwithstanding the foregoing, (i) upon the occurrence of an Event of Default,
or (ii) after the earlier of acceleration or December 3, 2003, interest on the
unpaid principal balance of this Note shall accrue and be paid at the Default
Rate.
Installments of principal plus accrued unpaid interest shall be due and payable
under this Note on the fifteenth (15th) day of each month, commencing July 15,
2002, and continuing on the same day of each successive month thereafter until
December 3, 2003. The entire remaining unpaid balance of principal and accrued
but unpaid interest shall be due and payable on December 3, 2003.
In any calendar year, upon ninety (90) days prior written notice given by the
Bank to the undersigned, the entire principal balance remaining unpaid and all
accrued and unpaid interest owing herein shall become immediately due and
payable at the option of the holder of this Note on April 30, 2003. This
mandatory prepayment option shall continue regularly and annually thereafter
until the earlier of (i) the exercise of such mandatory prepayment option by the
holder of this Note, or (ii) December 3, 2003.
The term "Maximum Rate," as used herein, shall mean at the particular time in
question the maximum nonusurious rate of interest which, under applicable law,
may then be charged on this Note. If such maximum rate of interest changes after
the date hereof, the Maximum Rate shall be automatically increased or decreased,
as the case may be, without notice to the undersigned from time to time as of
the effective date of each change in such maximum rate.
If this Note or any installment under this Note shall become payable on a day
other than a day on which the Bank is open for business, this payment may be
extended to the next succeeding business day and interest shall be payable at
the rate specified in this Note during this extension. Any payments of principal
in excess of the installment payments required under this Note need not be
accepted by the Bank (except as required under applicable law), but if accepted
shall apply to the installments last falling due. A late installment charge
equal to a reasonable amount not to exceed 5% of each late installment may be
charged on any installment payment not received by the Bank within 10 calendar
days after the installment due date, but acceptance of payment of this charge
shall not waive any Default under this Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank (including without limitation that
certain Revolving Credit Note dated of even date herewith in the amount of
$2,500,000 executed by the undersigned in favor of the Bank, as the same may be
amended, restated, increased, extended or otherwise modified from time to time),
and any and all modifications, renewals or extensions of it, whether joint or
several, contingent or absolute, now existing or later arising, and however
evidenced and whether incurred voluntarily or involuntarily, known or unknown,
or originally payable to the Bank or to a third party and subsequently acquired
by Bank including, without limitation, any late charges; loan fees or charges;
overdraft indebtedness; costs incurred by Bank in establishing, determining,
continuing or defending the validity or priority of any security interest,
pledge or other lien or in pursuing any of its rights or remedies under any loan
document (or otherwise) or in connection with any proceeding involving the Bank
as a result of any financial accommodation to the undersigned (or any of them);
and reasonable costs and expenses of attorneys and paralegals, whether inside or
outside counsel is used, and whether any suit or other action is instituted, and
to court costs if suit or action is instituted, and whether any such fees, costs
or expenses are incurred at the trial court level or on appeal, in bankruptcy,
in administrative proceedings, in probate proceedings or otherwise (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
and lien upon all items deposited in any account of any of the undersigned with
the Bank and by all proceeds of these items (cash or otherwise), all account
balances of any of the undersigned from time to time with the Bank, by all
property of any of the undersigned from time to time in the possession of the
Bank and by any other collateral, rights and properties described in each and
every deed of trust, mortgage, security agreement, pledge, assignment and other
agreement which has been, or will at any time(s) later be, executed by any (or
all) of the undersigned to or for the benefit of the Bank (collectively
"Collateral").
If an Event of Default (as defined in the Loan Agreement) occurs, or if the
undersigned (or any of them) or any guarantor under a guaranty of all or part of
the Indebtedness ("guarantor") (i) fail(s) to pay this Note or any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay
any Indebtedness owing on a demand basis upon demand; or (ii) fail(s) to comply
with any of the terms or provisions of any agreement between the undersigned (or
any of them) or any guarantor and the Bank; or (iii) become(s) insolvent or the
subject of a voluntary or involuntary proceeding in
bankruptcy, or a reorganization, arrangement or creditor composition proceeding,
(if a business entity) cease(s) doing business as a going concern, (if a natural
person) die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any
general partner of it dies, becomes incompetent or becomes the subject of a
bankruptcy proceeding or (if a corporation or a limited liability company) is
the subject of a dissolution, merger or consolidation; or (a) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall be discovered to be untrue or
incomplete; or (b) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the Indebtedness; or (c) if there is any failure
by any of the undersigned or any guarantor to pay when due any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such indebtedness; or (d) if the Bank deems itself insecure, believing that the
prospect of payment of this Note or any of the Indebtedness is impaired or shall
fear deterioration, removal or waste of any of the Collateral; or (e) if there
is filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon the undersigned (or any of them) or any guarantor or any
of the Collateral, including without limit, any accounts of the undersigned (or
any of them) or any guarantor with the Bank, then the Bank, upon the occurrence
of any of these events (each a "Default"), may at its option and without prior
notice to the undersigned (or any of them), declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence thereof to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any amounts owing by
the Bank to the undersigned (or any of them), charge interest at the default
rate provided in the document evidencing the relevant Indebtedness and exercise
any one or more of the rights and remedies granted to the Bank by any agreement
with the undersigned (or any of them) or given to it under applicable law. All
payments under this Note shall be in immediately available United States funds,
without setoff or counterclaim.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3.605 of the Texas Uniform Commercial
Code and waive(s) all other suretyship defenses or right to discharge. The
undersigned agree(s) that the Bank has the right to sell, assign, or grant
participations or any interest in, any or all of the Indebtedness, and that, in
connection with this right, but without limiting its ability to make other
disclosures to the full extent allowable, the Bank may disclose all documents
and information which the Bank now or later has relating to the undersigned or
the Indebtedness. The undersigned agree(s) that the Bank may provide information
relating to this Note or the Indebtedness or relating to the undersigned to the
Bank's parent, affiliates, subsidiaries and service providers.
The undersigned agree(s) to reimburse the holder or owner of this Note upon
demand for any and all costs and expenses (including without limit, court costs,
legal expenses and reasonable attorneys' fees, whether inside or outside counsel
is used, and whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to this
Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF TEXAS AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
This Note and all other documents, instruments and agreements evidencing,
governing, securing, guaranteeing or otherwise relating to or executed pursuant
to or in connection with this Note or the Indebtedness evidenced hereby (whether
executed and delivered prior to, concurrently with or subsequent to this Note),
as such documents may have been or may hereafter be amended from time to time
(the "Loan Documents") are intended to be performed in accordance with, and only
to the extent permitted by, all applicable usury laws. If any provision hereof
or of any of the other Loan Documents or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the application of such provision to any other person or
circumstance nor the remainder of the instrument in which such provision is
contained shall be affected thereby and shall be enforced to the greatest extent
permitted by law. It is expressly stipulated and agreed to be the intent of the
holder hereof to at all times comply with the usury and other applicable laws
now or hereafter governing the interest payable on the indebtedness evidenced by
this Note. If the applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the indebtedness evidenced by this Note, or
if Bank's exercise of the option to accelerate the maturity of this Note, or if
any prepayment by the undersigned or prepayment agreement results (or would, if
complied with, result) in the undersigned having paid, contracted for or being
charged for any interest in excess of that permitted by law, then it is the
express intent of the undersigned and Bank that this Note and the other Loan
Documents shall be limited to the extent necessary to prevent such result and
all excess amounts theretofore collected by Bank shall be credited on the
principal balance of this Note or, if fully paid, upon such other Indebtedness
as shall then remaining outstanding (or, if this Note and all other Indebtedness
have been paid in full, refunded to the undersigned), and the provisions of this
Note and the other Loan Documents shall immediately be deemed reformed and the
amounts thereafter collectable hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the then
applicable
2
law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder. All sums paid, or agreed to be paid, by the undersigned
for the use, forbearance, detention, taking, charging, receiving or reserving of
the indebtedness of the undersigned to Bank under this Note or arising under or
pursuant to the other Loan Documents shall, to the maximum extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the usury ceiling from
time to time in effect and applicable to such indebtedness for so long as such
indebtedness is outstanding. To the extent federal law permits Bank to contract
for, charge or receive a greater amount of interest, Bank will rely on federal
law instead of the Texas Finance Code, as supplemented by Texas Credit Title,
for the purpose of determining the Maximum Rate. Additionally, to the maximum
extent permitted by applicable law now or hereafter in effect, Bank may, at its
option and from time to time, implement any other method of computing the
Maximum Rate under the Texas Finance Code, as supplemented by Texas Credit
Title, or under other applicable law, by giving notice, if required, to the
undersigned as provided by applicable law now or hereafter in effect.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Bank to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
THE UNDERSIGNED AND THE BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE
OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS
AND COMMERCE CODE) REPRESENTS 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.
DEBTOR:
▇▇▇▇▇▇ GROUP, INC.,
a Delaware corporation
By:
------------------------------------
▇▇▇ ▇▇▇▇▇▇
CFO, Vice President of Finance
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ZIP CODE
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FOR BANK USE ONLY CCAR #
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LOAN OFFICER INITIALS LOAN GROUP NAME OBLIGOR NAME
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LOAN OFFICER ID. NO. LOAN GROUP NO. OBLIGOR NO. NOTE NO. AMOUNT
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3
[COMERICA LOGO] RESTATED SECURITY AGREEMENT
(All Assets)
As of March 29, 2002 for value received, ▇▇▇▇▇▇ GROUP, INC. ("Debtor") pledges,
assigns and grants to Comerica Bank-Texas, a Texas banking association ("Bank"),
whose address is P. O. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a continuing security interest and lien (any pledge,
assignment, security interest or other lien arising hereunder is sometimes
referred to herein as a "security interest") in the Collateral (as defined
below) to secure payment when due, whether by stated maturity, demand,
acceleration or otherwise, of all existing and future indebtedness
("Indebtedness") to the Bank of ▇▇▇▇▇▇ GROUP, INC. ("Borrower") and/or Debtor.
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown, originally payable to the Bank or to a third party
and subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness, any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of both
in-house and outside counsel and paralegals, whether inside or outside counsel
is used, whether or not a suit or action is instituted, and to court costs if a
suit or action is instituted, and whether attorneys' fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
Reference is made to that certain First Amended and Restated
Revolving Credit
Loan Agreement entered into by and between Debtor and Bank dated as of October
4, 1996 (as the same has been or may hereafter be amended, restated, or modified
from time to time, collectively, the "Loan Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in (i)
the Loan Agreement, or (ii) Article 9 of the Texas Business and Commerce Code,
as provided for in Section 5.12 hereof.
Debtor further covenants, agrees, represents and warrants as follows:
1. COLLATERAL shall mean all of the Debtor's assets and all of the following
property Debtor now or later owns or has an interest in, wherever located,
including without limitation:
(a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all Accounts, Chattel Paper (including without
limit Electronic Chattel Paper and Tangible Chattel Paper), contract
rights, Deposit Accounts, Documents, Instruments and rights to payment
evidenced by Chattel Paper, Documents or Instruments, Health Care
Insurance Receivables, Commercial Tort Claims, Letters of Credit,
Letter of Credit Rights, Supporting Obligations, and rights to payment
for money or funds advanced or sold),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all Software (for purposes of this Agreement "Software" consists of
all (i) computer programs and supporting information provided in
connection with a transaction relating to the program, and (ii)
computer programs embedded in goods and any supporting information
provided in connection with a transaction relating to the program
whether or not the program is associated with the goods in such a
manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires
a right to use the program in connection with the goods, and whether
or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),
(e) all Intellectual Property,
(f) all Investment Property including, without limit, securities,
securities entitlements, and financial assets, and including without
limitation, 100% of the outstanding capital voting stock of each
Domestic Subsidiary, and 65% of the outstanding capital voting stock
of each Foreign Subsidiary,
(g) all General Intangibles, including without limitation, all of Debtor's
rights to a tax refund from the Internal Revenue Services and proceeds
thereof;
(h) all Goods, Instruments, Documents, policies and certificates of
insurance, Deposit Accounts, money, Investment Property or other
property (except real property which is not a fixture) which are now
or later in possession or control of Bank, or as to which Bank now or
later controls possession by documents or otherwise, and
(i) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of collateral shall not
be limited by a separate reference to a more specific or narrower type of that
collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor
shall, at the request of Bank, ▇▇▇▇ its records and the Collateral to
clearly indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) none of the Collateral is subject to any security
interest other than that in favor of Bank; (c) there are no financing
statements on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a
security interest may be accomplished by control; and (e) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor
of Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer, lease or grant control to any person other than Bank
over, or permit to be sold, transferred, leased or controlled (by a
person other than Bank), any or all of the Collateral, except for
Inventory in the ordinary course of its business and will not return
any Inventory to its supplier. Bank or its representatives may at all
reasonable times inspect the Collateral and may enter upon all
premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an
exclusive, perfected and first security interest of Bank in the
Collateral. Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personalty, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which the Bank may have a lien or
security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so, and Debtor agrees to
repay all amounts so expended by Bank immediately upon
2
demand, together with interest at the highest lawful default rate
which could be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at
the highest lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable,
Debtor shall be deemed to have warranted that except as otherwise
indicated (a) each of those Accounts Receivable is valid and
enforceable without performance by Debtor of any act; (b) each of
those account balances are in fact owing, (c) there are no setoffs,
recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts
Receivable represented by a note, trade acceptance, draft or other
instrument or by any chattel paper or document, the same have been
endorsed and/or delivered by Debtor to Bank, (e) Debtor has not
received with respect to any Account Receivable, any notice of the
death of the related account debtor, or of the dissolution,
liquidation, termination of existence, insolvency, business failure,
appointment of a receiver for, assignment for the benefit of creditors
by, or filing of a petition in bankruptcy by or against, the account
debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the
account debtor is not an affiliate of Debtor, the United States of
America or any department, agency or instrumentality of it, or a
citizen or resident of any jurisdiction outside of the United States.
Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the
prior written consent of Bank. Debtor shall, at Bank's request,
arrange for verification of Accounts Receivable directly with account
debtors or by other methods acceptable to Bank.
2.8 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the
3
Collateral and hold or apply the property or money so received
pursuant to this Agreement; and (d) take such actions in its own name
or in Debtor's name as Bank, in its sole discretion, deems necessary
or appropriate to establish exclusive control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that
perfection of the Bank's security interest may be accomplished by
control.
2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANK'S OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or willful
misconduct.
3. COLLECTION OF PROCEEDS.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, or as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not any
Event of Default exists) the Indebtedness shall be on a "remittance
basis" as follows: Debtor shall at its sole expense establish and
maintain (and Bank, at Bank's option may establish and maintain at
Debtor's expense): (a) an United States Post Office lock box (the
"Lock Box"), to which Bank shall have exclusive access and control.
Debtor
4
expressly authorizes Bank, from time to time, to remove contents from
the Lock Box, for disposition in accordance with this Agreement.
Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor (other than
payments by electronic funds transfer) shall be remitted, for the
credit of Debtor, to the Lock Box, and Debtor shall include a like
statement on all invoices; and (b) a non-interest bearing deposit
account with Bank which shall be titled as designated by Bank (the
"Cash Collateral Account") to which Bank shall have exclusive access
and control. Debtor agrees to notify all account debtors and other
parties obligated to Debtor that all payments made to Debtor by
electronic funds transfer shall be remitted to the Cash Collateral
Account, and Debtor, at Bank's request, shall include a like statement
on all invoices. Debtor shall execute all documents and authorizations
as required by Bank to establish and maintain the Lock Box and the
Cash Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with
respect to, any Collateral shall, at Bank's option, (a) be applied to
the payment of the Indebtedness, whether then due or not, in such
order or at such time of application as Bank may determine in its sole
discretion, or, (b) be deposited to the Cash Collateral Account.
Debtor agrees that Bank shall not be liable for any loss or damage
which Debtor may suffer as a result of Bank's processing of items or
its exercise of any other rights or remedies under this Agreement,
including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action
by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation,
attorneys' fees and INCLUDING CLAIMS, DAMAGES, FINES, EXPENSES,
LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND RESULTING FROM BANK'S
OWN NEGLIGENCE except to the extent (but only to the extent) caused by
Bank's gross negligence or willful misconduct.
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor; or
5
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
(g) An Event of Default shall occur under the Loan Agreement, any
Loan Document, or any other instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral. At any
sale or other disposition of the Collateral pursuant to this Section
4.2, Bank disclaims all warranties which would otherwise be given
under the Uniform Commercial Code, including without limit a
disclaimer of any warranty relating to title, possession, quiet
enjoyment or the like, and Bank may communicate these disclaimers to a
purchaser at such disposition. This disclaimer of warranties will not
render the sale commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
At the request of Bank, whether or not an Event of Default shall have
occurred, Debtor shall immediately take such actions as the Bank shall
request to establish
6
exclusive control (as defined in the Uniform Commercial Code) by Bank
over any Collateral which is of such a nature that perfection of a
security interest may be accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank in such order as the Bank,
in its discretion, deems appropriate including, without limitation,
the following order: first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorneys' fees and legal expenses
incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first
to interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor shall
remain liable for any deficiency, which it shall pay to Bank
immediately upon demand. Debtor agrees that Secured Party shall be
under no obligation to accept any noncash proceeds in connection with
any sale or disposition of Collateral unless failure to do so would be
commercially unreasonable. If Secured Party agrees in its sole
discretion to accept noncash proceeds (unless the failure to do so
would be commercially unreasonable), Secured Party may ascribe any
commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining
the present value of proceeds to be received in the future or may
elect to apply proceeds to be received in the future only as and when
such proceeds are actually received in cash by Secured Party.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the Indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor and (b) authorizes Bank or any
agent of Bank, in its own name, at Debtor's expense, to do any of the
following, as Bank, in its sole discretion, deems appropriate:
(i) to demand, receive, ▇▇▇ for, and give receipts or acquittances
for any moneys due or to become due on any Collateral
(including, without limit, to draft against Collateral) and to
endorse any item representing any payment on or proceeds of the
Collateral;
(ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings or Collateral control
agreements deemed necessary or desirable by Bank to evidence,
perfect, or continue the security interests granted in this
Agreement; and
(iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9.615 (f) of the Uniform Commercial Code (as
in effect on or after July 1, 2001): (a) the Collateral which is the
subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for
cash promptly (but no later than 30 days) following the disposition;
(c) all reasonable closing costs customarily borne by the seller in
commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorneys' fees, whether inside
7
or outside counsel is used, and marketing costs; (d) the value of the
Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs
associated with maintaining such Collateral pending sale (to the
extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion
testimony given or considered in connection with a determination of
the value of such Collateral must be given by persons having at least
5 years experience in appraising property similar to the Collateral
and who have conducted and prepared a complete written appraisal of
such Collateral taking into consideration the factors set forth above.
The "value" of any such Collateral shall be a factor in determining
the amount of proceeds which would have been realized in a disposition
to a transferee other than a secured party, a person related to a
secured party or a secondary obligor under Section 9-615(f) of the
Uniform Commercial Code.
5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, location, chief executive
office, principal place of business, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a) proceed against any
person or property; (b) give any notice of sale in a manner or at such
time other than as required by Sections 9.611, 9.612 and 9.613 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's
power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand
payment or notice of acceleration of any Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled,
and diligence in collecting any Indebtedness, and agree(s) that the
Bank may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
8
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least ten days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise expressly provided in this Agreement, all terms in
this Agreement which are defined in the Uniform Commercial Code shall
have the meanings assigned to them in Article 9 (or, absent definition
in Article 9, in any other Article) of the Uniform Commercial Code, as
those meanings may be amended, revised or replaced from time to time.
"Uniform Commercial Code" means the Texas Business and Commerce Code
as amended, revised or replaced from time to time. Notwithstanding the
foregoing, the parties intend that the terms used herein which are
defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the
Uniform Commercial Code shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than
the Uniform Commercial Code in effect on the date of this Agreement,
then such term, as used herein, shall be given such broadened meaning.
If the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the date of
this Agreement, such amendment or holding shall be disregarded in
defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
9
5.15 Debtor represents and warrants that Debtor's exact name is the name
set forth in this Agreement. Debtor further represents and warrants
the following and agrees that Debtor is, and at all times shall be,
located at ▇▇▇▇ ▇ ▇'▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Debtor is a registered organization organized under the laws of the
United States, and Debtor is located in the state that United States
law and the Uniform Commercial Code designates as its location. Based
on the foregoing, Debtor is located (as determined pursuant to the
Uniform Commercial Code) in the State of Delaware.
If Collateral is located at other than the address specified above,
such Collateral is located and shall be maintained at
----------------------------------------------------------------------
STREET ADDRESS
----------------------------------------------------------------------
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce this Agreement or in exercising or
attempting to exercise any right or remedy under this Agreement or
incurred in any other matter or proceeding relating to this Security
Agreement.
5.19 This Agreement is a restatement of that certain Security Agreement
dated as of December 1, 2001 by and between Debtor and the Bank (the
"Original Agreement"). All liens, assignments and security interests
of the Original Agreement are hereby ratified, confirmed, brought
forward, renewed, extended and rearranged as Collateral for the
Indebtedness, in addition to and cumulative of all other Collateral
for the Indebtedness.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. THIS IS A TEXAS SPECIFIC PROVISION: THIS WRITTEN LOAN AGREEMENT (AS DEFINED
BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS 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.
8. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*NONE, IF LEFT BLANK)
10
DEBTOR: BANK:
▇▇▇▇▇▇ GROUP, INC., COMERICA BANK-TEXAS,
a Delaware corporation a Texas banking association
By: By:
------------------------------ ------------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
CFO, Vice President of Finance Vice President
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[COMERICA LOGO] SECURITY AGREEMENT
(All Assets)
As of March 29, 2002 for value received, ▇▇▇▇▇▇ GROUP OF LOUISIANA, INC., a
Delaware corporation ("Debtor") pledges, assigns and grants to Comerica
Bank-Texas, a Texas banking association ("Bank"), whose address is P. O. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a continuing
security interest and lien (any pledge, assignment, security interest or other
lien arising hereunder is sometimes referred to herein as a "security interest")
in the Collateral (as defined below) to secure payment when due, whether by
stated maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of ▇▇▇▇▇▇ GROUP, INC. ("Borrower").
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown, originally payable to the Bank or to a third party
and subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness, any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of both
in-house and outside counsel and paralegals, whether inside or outside counsel
is used, whether or not a suit or action is instituted, and to court costs if a
suit or action is instituted, and whether attorneys' fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
Reference is made to that certain First Amended and Restated
Revolving Credit
Loan Agreement entered into by and between Borrower and Bank dated as of October
4, 1996 (as the same has been or may hereafter be amended, restated, or modified
from time to time, collectively, the "Loan Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in (i)
the Loan Agreement, or (ii) Article 9 of the Texas Business and Commerce Code,
as provided for in Section 5.12 hereof.
Debtor further covenants, agrees, represents and warrants as follows:
1. COLLATERAL shall mean all of the Debtor's assets and all of the following
property Debtor now or later owns or has an interest in, wherever located,
including without limitation:
(a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all Accounts, Chattel Paper (including without
limit Electronic Chattel Paper and Tangible Chattel Paper), contract
rights, Deposit Accounts, Documents, Instruments and rights to payment
evidenced by Chattel Paper, Documents or Instruments, Health Care
Insurance Receivables, Commercial Tort Claims, Letters of Credit,
Letter of Credit Rights, Supporting Obligations, and rights to payment
for money or funds advanced or sold),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all Software (for purposes of this Agreement "Software" consists of
all (i) computer programs and supporting information provided in
connection with a transaction relating to the program, and (ii)
computer programs embedded in goods and any supporting information
provided in connection with a transaction relating to the program
whether or not the program is associated with the goods in such a
manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires
a right to use the program in connection with the goods, and whether
or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),
(e) all Intellectual Property,
(f) all Investment Property including, without limit, securities,
securities entitlements, and financial assets,
(g) all General Intangibles, including without limitation, all of Debtor's
rights to a tax refund from the Internal Revenue Services and proceeds
thereof;
(h) all Goods, Instruments, Documents, policies and certificates of
insurance, Deposit Accounts, money, Investment Property or other
property (except real property which is not a fixture) which are now
or later in possession or control of Bank, or as to which Bank now or
later controls possession by documents or otherwise, and
(i) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of collateral shall not
be limited by a separate reference to a more specific or narrower type of that
collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor
shall, at the request of Bank, ▇▇▇▇ its records and the Collateral to
clearly indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) none of the Collateral is subject to any security
interest other than that in favor of Bank; (c) there are no financing
statements on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a
security interest may be accomplished by control; and (e) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor
of Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer, lease or grant control to any person other than Bank
over, or permit to be sold, transferred, leased or controlled (by a
person other than Bank), any or all of the Collateral, except for
Inventory in the ordinary course of its business and will not return
any Inventory to its supplier. Bank or its representatives may at all
reasonable times inspect the Collateral and may enter upon all
premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an
exclusive, perfected and first security interest of Bank in the
Collateral. Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personalty, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which the Bank may have a lien or
security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so, and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest lawful default rate which could
be charged by Bank on any Indebtedness.
2
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at
the highest lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable,
Debtor shall be deemed to have warranted that except as otherwise
indicated (a) each of those Accounts Receivable is valid and
enforceable without performance by Debtor of any act; (b) each of
those account balances are in fact owing, (c) there are no setoffs,
recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts
Receivable represented by a note, trade acceptance, draft or other
instrument or by any chattel paper or document, the same have been
endorsed and/or delivered by Debtor to Bank, (e) Debtor has not
received with respect to any Account Receivable, any notice of the
death of the related account debtor, or of the dissolution,
liquidation, termination of existence, insolvency, business failure,
appointment of a receiver for, assignment for the benefit of creditors
by, or filing of a petition in bankruptcy by or against, the account
debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the
account debtor is not an affiliate of Debtor, the United States of
America or any department, agency or instrumentality of it, or a
citizen or resident of any jurisdiction outside of the United States.
Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the
prior written consent of Bank. Debtor shall, at Bank's request,
arrange for verification of Accounts Receivable directly with account
debtors or by other methods acceptable to Bank.
2.8 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the Collateral and hold or apply
the property or money so received pursuant to this Agreement; and (d)
take such actions in its own name or in Debtor's name as Bank, in its
sole discretion, deems necessary or appropriate to
3
establish exclusive control (as defined in the Uniform Commercial
Code) over any Collateral of such nature that perfection of the Bank's
security interest may be accomplished by control.
2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANK'S OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or willful
misconduct.
3. COLLECTION OF PROCEEDS.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, or as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not any
Event of Default exists) the Indebtedness shall be on a "remittance
basis" as follows: Debtor shall at its sole expense establish and
maintain (and Bank, at Bank's option may establish and maintain at
Debtor's expense): (a) an United States Post Office lock box (the
"Lock Box"), to which Bank shall have exclusive access and control.
Debtor expressly authorizes Bank, from time to time, to remove
contents from the Lock Box, for disposition in accordance with this
Agreement. Debtor agrees to notify all account debtors and other
parties obligated to
4
Debtor that all payments made to Debtor (other than payments by
electronic funds transfer) shall be remitted, for the credit of
Debtor, to the Lock Box, and Debtor shall include a like statement on
all invoices; and (b) a non-interest bearing deposit account with Bank
which shall be titled as designated by Bank (the "Cash Collateral
Account") to which Bank shall have exclusive access and control.
Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic
funds transfer shall be remitted to the Cash Collateral Account, and
Debtor, at Bank's request, shall include a like statement on all
invoices. Debtor shall execute all documents and authorizations as
required by Bank to establish and maintain the Lock Box and the Cash
Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with
respect to, any Collateral shall, at Bank's option, (a) be applied to
the payment of the Indebtedness, whether then due or not, in such
order or at such time of application as Bank may determine in its sole
discretion, or, (b) be deposited to the Cash Collateral Account.
Debtor agrees that Bank shall not be liable for any loss or damage
which Debtor may suffer as a result of Bank's processing of items or
its exercise of any other rights or remedies under this Agreement,
including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action
by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation,
attorneys' fees and INCLUDING CLAIMS, DAMAGES, FINES, EXPENSES,
LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND RESULTING FROM BANK'S
OWN NEGLIGENCE except to the extent (but only to the extent) caused by
Bank's gross negligence or willful misconduct.
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
5
(g) An Event of Default shall occur under the Loan Agreement, any
Loan Document, or any other instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral. At any
sale or other disposition of the Collateral pursuant to this Section
4.2, Bank disclaims all warranties which would otherwise be given
under the Uniform Commercial Code, including without limit a
disclaimer of any warranty relating to title, possession, quiet
enjoyment or the like, and Bank may communicate these disclaimers to a
purchaser at such disposition. This disclaimer of warranties will not
render the sale commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
At the request of Bank, whether or not an Event of Default shall have
occurred, Debtor shall immediately take such actions as the Bank shall
request to establish exclusive control (as defined in the Uniform
Commercial Code) by Bank over any Collateral which is of such a nature
that perfection of a security interest may be accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank in such order as the Bank,
in its discretion, deems appropriate including, without limitation,
the following
6
order: first upon all expenses authorized by the Uniform Commercial
Code and all reasonable attorneys' fees and legal expenses incurred by
Bank; the balance of the proceeds of the sale or other disposition
shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor shall
remain liable for any deficiency, which it shall pay to Bank
immediately upon demand. Debtor agrees that Secured Party shall be
under no obligation to accept any noncash proceeds in connection with
any sale or disposition of Collateral unless failure to do so would be
commercially unreasonable. If Secured Party agrees in its sole
discretion to accept noncash proceeds (unless the failure to do so
would be commercially unreasonable), Secured Party may ascribe any
commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining
the present value of proceeds to be received in the future or may
elect to apply proceeds to be received in the future only as and when
such proceeds are actually received in cash by Secured Party.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the Indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor and (b) authorizes Bank or any
agent of Bank, in its own name, at Debtor's expense, to do any of the
following, as Bank, in its sole discretion, deems appropriate:
(i) to demand, receive, ▇▇▇ for, and give receipts or acquittances
for any moneys due or to become due on any Collateral
(including, without limit, to draft against Collateral) and to
endorse any item representing any payment on or proceeds of the
Collateral;
(ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings or Collateral control
agreements deemed necessary or desirable by Bank to evidence,
perfect, or continue the security interests granted in this
Agreement; and
(iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9.615 (f) of the Uniform Commercial Code (as
in effect on or after July 1, 2001): (a) the Collateral which is the
subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for
cash promptly (but no later than 30 days) following the disposition;
(c) all reasonable closing costs customarily borne by the seller in
commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorneys' fees, whether inside or
outside counsel is used, and marketing costs; (d) the value of the
Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs
associated with maintaining such Collateral pending sale (to the
extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion
testimony given or considered
7
in connection with a determination of the value of such Collateral
must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted
and prepared a complete written appraisal of such Collateral taking
into consideration the factors set forth above. The "value" of any
such Collateral shall be a factor in determining the amount of
proceeds which would have been realized in a disposition to a
transferee other than a secured party, a person related to a secured
party or a secondary obligor under Section 9-615(f) of the Uniform
Commercial Code.
5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, location, chief executive
office, principal place of business, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a) proceed against any
person or property; (b) give any notice of sale in a manner or at such
time other than as required by Sections 9.611, 9.612 and 9.613 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's
power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand
payment or notice of acceleration of any Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled,
and diligence in collecting any Indebtedness, and agree(s) that the
Bank may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least ten days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a
8
shorter notice period is reasonable under the circumstances. A notice
shall be deemed to be given under this Agreement when delivered to
Debtor or when placed in an envelope addressed to Debtor and
deposited, with postage prepaid, in a post office or official
depository under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The mailing shall
be by overnight courier, certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise expressly provided in this Agreement, all terms in
this Agreement which are defined in the Uniform Commercial Code shall
have the meanings assigned to them in Article 9 (or, absent definition
in Article 9, in any other Article) of the Uniform Commercial Code, as
those meanings may be amended, revised or replaced from time to time.
"Uniform Commercial Code" means the Texas Business and Commerce Code
as amended, revised or replaced from time to time. Notwithstanding the
foregoing, the parties intend that the terms used herein which are
defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the
Uniform Commercial Code shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than
the Uniform Commercial Code in effect on the date of this Agreement,
then such term, as used herein, shall be given such broadened meaning.
If the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the date of
this Agreement, such amendment or holding shall be disregarded in
defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
9
5.15 Debtor represents and warrants that Debtor's exact name is the name
set forth in this Agreement. Debtor further represents and warrants
the following and agrees that Debtor is, and at all times shall be,
located at the following mailing address: ▇▇▇▇ ▇ ▇'▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Debtor is a registered organization organized under the laws of the
United States, and Debtor is located in the state that United States
law and the Uniform Commercial Code designates as its location. Based
on the foregoing, Debtor is located (as determined pursuant to the
Uniform Commercial Code) in the State of Delaware.
If Collateral is located at other than the address specified above,
such Collateral is located and shall be maintained at
----------------------------------------------------------------------
STREET ADDRESS
----------------------------------------------------------------------
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce this Agreement or in exercising or
attempting to exercise any right or remedy under this Agreement or
incurred in any other matter or proceeding relating to this Security
Agreement.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. THIS IS A TEXAS SPECIFIC PROVISION: THIS WRITTEN LOAN AGREEMENT (AS DEFINED
BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS 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.
8. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*NONE, IF LEFT BLANK)
10
DEBTOR: BANK:
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC., COMERICA BANK-TEXAS,
a Delaware corporation a Texas banking association
By: By:
------------------------------------------- ------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President and Secretary ▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
11
[COMERICA LOGO] SECURITY AGREEMENT
(All Assets)
As of March 29, 2002 for value received, ▇▇▇▇▇▇ GROUP OF SWEDEN, INC., a
Delaware corporation ("Debtor") pledges, assigns and grants to Comerica
Bank-Texas , a Texas banking association ("Bank"), whose address is P. O. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a continuing
security interest and lien (any pledge, assignment, security interest or other
lien arising hereunder is sometimes referred to herein as a "security interest")
in the Collateral (as defined below) to secure payment when due, whether by
stated maturity, demand, acceleration or otherwise, of all existing and future
indebtedness ("Indebtedness") to the Bank of ▇▇▇▇▇▇ GROUP, INC. ("Borrower").
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown, originally payable to the Bank or to a third party
and subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness, any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of both
in-house and outside counsel and paralegals, whether inside or outside counsel
is used, whether or not a suit or action is instituted, and to court costs if a
suit or action is instituted, and whether attorneys' fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.
Reference is made to that certain First Amended and Restated Revolving Credit
Loan Agreement entered into by and between Borrower and Bank dated as of October
4, 1996 (as the same has been or may hereafter be amended, restated, or modified
from time to time, collectively, the "Loan Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in (i)
the Loan Agreement, or (ii) Article 9 of the Texas Business and Commerce Code,
as provided for in Section 5.12 hereof.
Debtor further covenants, agrees, represents and warrants as follows:
1. COLLATERAL shall mean all of the Debtor's assets and all of the following
property Debtor now or later owns or has an interest in, wherever located,
including without limitation:
(a) all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all Accounts, Chattel Paper (including without
limit Electronic Chattel Paper and Tangible Chattel Paper), contract
rights, Deposit Accounts, Documents, Instruments and rights to payment
evidenced by Chattel Paper, Documents or Instruments, Health Care
Insurance Receivables, Commercial Tort Claims, Letters of Credit,
Letter of Credit Rights, Supporting Obligations, and rights to payment
for money or funds advanced or sold),
(b) all Inventory,
(c) all Equipment and Fixtures,
(d) all Software (for purposes of this Agreement "Software" consists of
all (i) computer programs and supporting information provided in
connection with a transaction relating to the program, and (ii)
computer programs embedded in goods and any supporting information
provided in connection with a transaction relating to the program
whether or not the program is associated with the goods in such a
manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires
a right to use the program in connection with the goods, and whether
or not the program is embedded in goods that consist solely of the
medium in which the program is embedded),
(e) all Intellectual Property,
(f) all Investment Property including, without limit, securities,
securities entitlements, and financial assets,
(g) all General Intangibles, including without limitation, all of Debtor's
rights to a tax refund from the Internal Revenue Services and proceeds
thereof;
(h) all Goods, Instruments, Documents, policies and certificates of
insurance, Deposit Accounts, money, Investment Property or other
property (except real property which is not a fixture) which are now
or later in possession or control of Bank, or as to which Bank now or
later controls possession by documents or otherwise, and
(i) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of collateral shall not
be limited by a separate reference to a more specific or narrower type of that
collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor
shall, at the request of Bank, ▇▇▇▇ its records and the Collateral to
clearly indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) none of the Collateral is subject to any security
interest other than that in favor of Bank; (c) there are no financing
statements on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a
security interest may be accomplished by control; and (e) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor
of Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer, lease or grant control to any person other than Bank
over, or permit to be sold, transferred, leased or controlled (by a
person other than Bank), any or all of the Collateral, except for
Inventory in the ordinary course of its business and will not return
any Inventory to its supplier. Bank or its representatives may at all
reasonable times inspect the Collateral and may enter upon all
premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an
exclusive, perfected and first security interest of Bank in the
Collateral. Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personalty, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which the Bank may have a lien or
security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so, and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest lawful default rate which could
be charged by Bank on any Indebtedness.
2
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at
the highest lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 On each occasion on which Debtor evidences to Bank the account
balances on and the nature and extent of the Accounts Receivable,
Debtor shall be deemed to have warranted that except as otherwise
indicated (a) each of those Accounts Receivable is valid and
enforceable without performance by Debtor of any act; (b) each of
those account balances are in fact owing, (c) there are no setoffs,
recoupments, credits, contra accounts, counterclaims or defenses
against any of those Accounts Receivable, (d) as to any Accounts
Receivable represented by a note, trade acceptance, draft or other
instrument or by any chattel paper or document, the same have been
endorsed and/or delivered by Debtor to Bank, (e) Debtor has not
received with respect to any Account Receivable, any notice of the
death of the related account debtor, or of the dissolution,
liquidation, termination of existence, insolvency, business failure,
appointment of a receiver for, assignment for the benefit of creditors
by, or filing of a petition in bankruptcy by or against, the account
debtor, and (f) as to each Account Receivable, except as may be
expressly permitted by Bank to the contrary in another document, the
account debtor is not an affiliate of Debtor, the United States of
America or any department, agency or instrumentality of it, or a
citizen or resident of any jurisdiction outside of the United States.
Debtor will do all acts and will execute all writings requested by
Bank to perform, enforce performance of, and collect all Accounts
Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the
prior written consent of Bank. Debtor shall, at Bank's request,
arrange for verification of Accounts Receivable directly with account
debtors or by other methods acceptable to Bank.
2.8 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.9 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.10 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the Collateral and hold or apply
the property or money so received pursuant to this Agreement; and (d)
take such actions in its own name or in Debtor's name as Bank, in its
sole discretion, deems necessary or appropriate to
3
establish exclusive control (as defined in the Uniform Commercial
Code) over any Collateral of such nature that perfection of the Bank's
security interest may be accomplished by control.
2.11 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.12 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.13 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANK'S OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or willful
misconduct.
3. COLLECTION OF PROCEEDS.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, or as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
3.2 Debtor agrees that immediately upon Bank's request (whether or not any
Event of Default exists) the Indebtedness shall be on a "remittance
basis" as follows: Debtor shall at its sole expense establish and
maintain (and Bank, at Bank's option may establish and maintain at
Debtor's expense): (a) an United States Post Office lock box (the
"Lock Box"), to which Bank shall have exclusive access and control.
Debtor expressly authorizes Bank, from time to time, to remove
contents from the Lock Box, for disposition in accordance with this
Agreement. Debtor agrees to notify all account debtors and other
parties obligated to
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Debtor that all payments made to Debtor (other than payments by
electronic funds transfer) shall be remitted, for the credit of
Debtor, to the Lock Box, and Debtor shall include a like statement on
all invoices; and (b) a non-interest bearing deposit account with Bank
which shall be titled as designated by Bank (the "Cash Collateral
Account") to which Bank shall have exclusive access and control.
Debtor agrees to notify all account debtors and other parties
obligated to Debtor that all payments made to Debtor by electronic
funds transfer shall be remitted to the Cash Collateral Account, and
Debtor, at Bank's request, shall include a like statement on all
invoices. Debtor shall execute all documents and authorizations as
required by Bank to establish and maintain the Lock Box and the Cash
Collateral Account.
3.3 All items or amounts which are remitted to the Lock Box, to the Cash
Collateral Account, or otherwise delivered by or for the benefit of
Debtor to Bank on account of partial or full payment of, or with
respect to, any Collateral shall, at Bank's option, (a) be applied to
the payment of the Indebtedness, whether then due or not, in such
order or at such time of application as Bank may determine in its sole
discretion, or, (b) be deposited to the Cash Collateral Account.
Debtor agrees that Bank shall not be liable for any loss or damage
which Debtor may suffer as a result of Bank's processing of items or
its exercise of any other rights or remedies under this Agreement,
including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action
by any third party arising out of or in connection with the processing
of items or the exercise of any other rights or remedies under this
Agreement. Debtor agrees to indemnify and hold Bank harmless from and
against all such third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation,
attorneys' fees and INCLUDING CLAIMS, DAMAGES, FINES, EXPENSES,
LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND RESULTING FROM BANK'S
OWN NEGLIGENCE except to the extent (but only to the extent) caused by
Bank's gross negligence or willful misconduct.
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
5
(g) An Event of Default shall occur under the Loan Agreement, any
Loan Document, or any other instrument, agreement or other
document evidencing, securing or otherwise relating to any of the
Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral. At any
sale or other disposition of the Collateral pursuant to this Section
4.2, Bank disclaims all warranties which would otherwise be given
under the Uniform Commercial Code, including without limit a
disclaimer of any warranty relating to title, possession, quiet
enjoyment or the like, and Bank may communicate these disclaimers to a
purchaser at such disposition. This disclaimer of warranties will not
render the sale commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
At the request of Bank, whether or not an Event of Default shall have
occurred, Debtor shall immediately take such actions as the Bank shall
request to establish exclusive control (as defined in the Uniform
Commercial Code) by Bank over any Collateral which is of such a nature
that perfection of a security interest may be accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank in such order as the Bank,
in its discretion, deems appropriate including, without limitation,
the following
6
order: first upon all expenses authorized by the Uniform Commercial
Code and all reasonable attorneys' fees and legal expenses incurred by
Bank; the balance of the proceeds of the sale or other disposition
shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor shall
remain liable for any deficiency, which it shall pay to Bank
immediately upon demand. Debtor agrees that Secured Party shall be
under no obligation to accept any noncash proceeds in connection with
any sale or disposition of Collateral unless failure to do so would be
commercially unreasonable. If Secured Party agrees in its sole
discretion to accept noncash proceeds (unless the failure to do so
would be commercially unreasonable), Secured Party may ascribe any
commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining
the present value of proceeds to be received in the future or may
elect to apply proceeds to be received in the future only as and when
such proceeds are actually received in cash by Secured Party.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the Indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor and (b) authorizes Bank or any
agent of Bank, in its own name, at Debtor's expense, to do any of the
following, as Bank, in its sole discretion, deems appropriate:
(i) to demand, receive, ▇▇▇ for, and give receipts or acquittances
for any moneys due or to become due on any Collateral
(including, without limit, to draft against Collateral) and to
endorse any item representing any payment on or proceeds of the
Collateral;
(ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings or Collateral control
agreements deemed necessary or desirable by Bank to evidence,
perfect, or continue the security interests granted in this
Agreement; and
(iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9.615 (f) of the Uniform Commercial Code (as
in effect on or after July 1, 2001): (a) the Collateral which is the
subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for
cash promptly (but no later than 30 days) following the disposition;
(c) all reasonable closing costs customarily borne by the seller in
commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorneys' fees, whether inside or
outside counsel is used, and marketing costs; (d) the value of the
Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs
associated with maintaining such Collateral pending sale (to the
extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion
testimony given or considered
7
in connection with a determination of the value of such Collateral
must be given by persons having at least 5 years experience in
appraising property similar to the Collateral and who have conducted
and prepared a complete written appraisal of such Collateral taking
into consideration the factors set forth above. The "value" of any
such Collateral shall be a factor in determining the amount of
proceeds which would have been realized in a disposition to a
transferee other than a secured party, a person related to a secured
party or a secondary obligor under Section 9-615(f) of the Uniform
Commercial Code.
5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, location, chief executive
office, principal place of business, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a) proceed against any
person or property; (b) give any notice of sale in a manner or at such
time other than as required by Sections 9.611, 9.612 and 9.613 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's
power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand
payment or notice of acceleration of any Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled,
and diligence in collecting any Indebtedness, and agree(s) that the
Bank may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least ten days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a
8
shorter notice period is reasonable under the circumstances. A notice
shall be deemed to be given under this Agreement when delivered to
Debtor or when placed in an envelope addressed to Debtor and
deposited, with postage prepaid, in a post office or official
depository under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The mailing shall
be by overnight courier, certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise expressly provided in this Agreement, all terms in
this Agreement which are defined in the Uniform Commercial Code shall
have the meanings assigned to them in Article 9 (or, absent definition
in Article 9, in any other Article) of the Uniform Commercial Code, as
those meanings may be amended, revised or replaced from time to time.
"Uniform Commercial Code" means the Texas Business and Commerce Code
as amended, revised or replaced from time to time. Notwithstanding the
foregoing, the parties intend that the terms used herein which are
defined in the Uniform Commercial Code have, at all times, the
broadest and most inclusive meanings possible. Accordingly, if the
Uniform Commercial Code shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than
the Uniform Commercial Code in effect on the date of this Agreement,
then such term, as used herein, shall be given such broadened meaning.
If the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more narrowly, or less
inclusively, than the Uniform Commercial Code in effect on the date of
this Agreement, such amendment or holding shall be disregarded in
defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
9
5.15 Debtor represents and warrants that Debtor's exact name is the name
set forth in this Agreement. Debtor further represents and warrants
the following and agrees that Debtor is, and at all times shall be,
located at the following mailing address: ▇▇▇▇ ▇ ▇'▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Debtor is a registered organization organized under the laws of the
United States, and Debtor is located in the state that United States
law and the Uniform Commercial Code designates as its location. Based
on the foregoing, Debtor is located (as determined pursuant to the
Uniform Commercial Code) in the State of Delaware.
If Collateral is located at other than the address specified above,
such Collateral is located and shall be maintained at
----------------------------------------------------------------------
STREET ADDRESS
----------------------------------------------------------------------
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce this Agreement or in exercising or
attempting to exercise any right or remedy under this Agreement or
incurred in any other matter or proceeding relating to this Security
Agreement.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. THIS IS A TEXAS SPECIFIC PROVISION: THIS WRITTEN LOAN AGREEMENT (AS DEFINED
BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS 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.
8. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*NONE, IF LEFT BLANK)
10
DEBTOR: BANK:
▇▇▇▇▇▇ GROUP OF SWEDEN, INC., COMERICA BANK-TEXAS,
a Delaware corporation a Texas banking association
By: By:
---------------------------------- ------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
11
[COMERICA LOGO] SECURITY AGREEMENT
(Negotiable Collateral)
As of March 29, 2002, for value received, the undersigned ("Debtor") pledges,
assigns and grants to Comerica Bank-Texas, a Texas banking association ("Bank"),
whose address is P. O. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a continuing security interest and lien (any pledge,
assignment, security interest or other lien arising hereunder is sometimes
referred to herein as a "security interest") in the Collateral (as defined
below) to secure payment when due, whether by stated maturity, demand
acceleration or otherwise, of all existing and future indebtedness
("Indebtedness") to the Bank of ▇▇▇▇▇▇ Group, Inc. ("Borrower") and/or Debtor.
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown originally payable to the Bank or to a third party and
subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness, any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of
counsel and paralegals, whether inside or outside counsel is used, whether or
not a suit or action is instituted, and to court costs if a suit or action is
instituted, and whether attorneys' fees or court costs are incurred at the trial
court level, on appeal, in a bankruptcy, administrative or probate proceeding or
otherwise.
Debtor further covenants, agrees, represents and warrants as follows:
1. COLLATERAL shall mean:
(a) Debtor's shares of stock (up to the percentages indicated) in the
companies listed on Schedule I attached hereto and incorporated herein
for all purposes;
(b) all goods, instruments (including, without limit, promissory notes),
documents (including, without limit, negotiable documents), policies
and certificates of insurance, deposit accounts, and money, investment
property or other property (except real property which is not a
fixture) which are now or later in possession or control of Bank, or
as to which Bank now or later controls possession by documents or
otherwise, and
(c) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, stock dividends, dividends,
securities, distributions, revenues, other property rights of any kind
(including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the
above including, without limit, cash or other property which were
proceeds and are recovered by a bankruptcy trustee or otherwise as a
preferential transfer by Debtor.
In the definition of Collateral, a reference to a type of collateral shall
not be limited by a separate reference to a more specific or narrower type
of that collateral.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records. Debtor
shall, at the request of Bank, ▇▇▇▇ its records and the Collateral to
clearly indicate the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the
right and authority to subject it to a security interest granted to
Bank; (b) none of the Collateral is subject to any security interest
other than that in favor of Bank; (c) there are no financing
statements on file, other than in favor of Bank; (d) no person, other
than Bank, has possession or control (as defined in the Uniform
Commercial Code) of any Collateral of such nature that perfection of a
security interest may be accomplished by control; and (e) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor
of Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral. Bank or its representatives may at all
reasonable times inspect the Collateral and may enter upon all
premises where the Collateral is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue an
exclusive perfected and first security interest of Bank in the
Collateral. Debtor agrees that Bank has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personalty, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which the Bank may have a lien or
security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so, and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest lawful default rate which could
be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so
expended by Bank immediately upon demand, together with interest at
the highest lawful default rate which could be charged by Bank on any
Indebtedness.
2.7 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.8 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.9 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of
2
the Collateral, and hold the same as Collateral, or apply the same to
the Indebtedness, the manner and distribution of the application to be
in the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the Collateral and hold or apply
the property or money so received pursuant to this Agreement; and (d)
take such actions in its own name or in Debtor's name as Bank, in its
sole discretion, deems necessary or appropriate to establish exclusive
control (as defined in the Uniform Commercial Code) over any
Collateral of such nature that perfection of the Bank's security
interest may be accomplished by control.
2.10 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.11 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.12 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANKS OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or willful
misconduct.
3. COLLECTION OF PROCEEDS. Debtor agrees to collect and enforce payment of all
Collateral until Bank shall direct Debtor to the contrary. Immediately upon
notice to Debtor by Bank and at all times after that, Debtor agrees to
fully and promptly cooperate and assist Bank in the collection and
enforcement of all Collateral and to hold in trust for Bank all payments
received in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or guaranty
and all rights in the nature of a lien or security interest which Debtor
now or later has regarding Collateral. Immediately upon and after such
notice, Debtor agrees to (a) endorse to Bank and immediately deliver to
Bank all payments received on Collateral or from the sale, lease or other
disposition of any Collateral or arising from any other rights or interests
of Debtor in the Collateral, in the form received by Debtor without
commingling with any other funds, and (b) immediately deliver to Bank all
property in Debtor's possession or later coming into Debtor's possession
through enforcement of Debtor's rights or interests in the Collateral.
Debtor irrevocably authorizes Bank or any Bank employee or agent to endorse
the name of Debtor upon any checks or other items which are received in
payment for any Collateral, and to do any and all things necessary in order
to reduce these items to money. Bank shall have no duty as to the
collection or protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of reasonable care in
the custody and preservation of Collateral in the possession of Bank.
Debtor agrees to take all steps necessary to preserve rights against prior
parties with respect to the Collateral. Nothing in this Section 3 shall be
deemed a consent by Bank to any sale, lease or other disposition of any
Collateral.
3
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
(g) An event of default shall occur under any instrument, agreement
or other document evidencing, securing or otherwise relating to
any of the Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it, including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition,
4
and advertisement, and other notice or demand, any right or
equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of
Bank to sell, lease, or otherwise dispose of the Collateral or as
to the application by Bank of the proceeds of sale or otherwise,
which would otherwise be required by, or available to Debtor
under, applicable law are expressly waived by Debtor to the
fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral. Any sale
of any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral. At any sale or other
disposition of the Collateral pursuant to this Section 4.2, Bank
disclaims all warranties which would otherwise be given under the
Uniform Commercial Code, including without limit a disclaimer of any
warranty relating to title, possession, quiet enjoyment or the like,
and Bank may communicate these disclaimers to a purchaser at such
disposition. This disclaimer of warranties will not render the sale
commercially unreasonable.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in any Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
At the request of Bank, whether or not an Event of Default shall have
occurred, Debtor shall immediately take such actions as the Bank shall
request to establish exclusive control (as defined in the Uniform
Commercial Code) by Bank over any Collateral which is of such a nature
that perfection of a security interest may be accomplished by control.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank in such order as the Bank,
in its discretion, deems appropriate including, without limitation,
the following order: first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorneys' fees and legal expenses
incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first
to interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor shall
remain liable for any deficiency, which it shall pay to Bank
immediately upon demand. Debtor agrees that Secured Party shall be
under no obligation to accept any noncash proceeds in connection with
any sale or disposition of Collateral unless failure to do so would be
commercially unreasonable. If Secured Party agrees in its sole
discretion to accept noncash proceeds (unless the failure to do so
would be commercially unreasonable), Secured Party may ascribe any
commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining
the present value of proceeds to be received in the future or may
elect to apply proceeds to be received in the future only as and when
such proceeds are actually received in cash by Secured Party.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the Indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
5
4.7 Debtor (a) irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor and (b) authorizes Bank or any
agent of Bank, in its own name, at Debtor's expense, to do any of the
following, as Bank, in its sole discretion, deems appropriate:
(i) to demand, receive, ▇▇▇ for, and give receipts or acquittances
for any moneys due or to become due with respect to any
Collateral and to endorse any item representing any payment on
or proceeds of the Collateral;
(ii) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the
security interests granted in this Agreement; and
(iii) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
4.9 The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9.615(f) of the Uniform Commercial Code (as
in effect on or after July 1, 2001): (a) the Collateral which is the
subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any
manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for
cash promptly (but no later than 30 days) following the disposition;
(c) all reasonable closing costs customarily borne by the seller in
commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorneys' fees, whether inside or
outside counsel is used, and marketing costs; (d) the value of the
Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs
associated with maintaining such Collateral pending sale (to the
extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion
testimony given or considered in connection with a determination of
the value of such Collateral must be given by persons having at least
5 years experience in appraising property similar to the Collateral
and who have conducted and prepared a complete written appraisal of
such Collateral taking into consideration the factors set forth above.
The "value" of any such Collateral shall be a factor in determining
the amount of proceeds which would have been realized in a disposition
to a transferee other than a secured party, a person related to a
secured party or a secondary obligor under Section 9.615(f) of the
Uniform Commercial Code.
5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, location, chief executive
office, principal place of business, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
6
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a) proceed against any
person or property; (b) give any notice of sale in a manner or at such
time other than as required by Sections 9.611, 9.612 and 9.613 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's
power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand
payment or notice of acceleration of any Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled,
and diligence in collecting any Indebtedness, and agree(s) that the
Bank may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least ten days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
7
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform
Commercial Code, as those meanings may be amended, revised or replaced
from time to time. "Uniform Commercial Code" means the Texas Business
and Commerce Code as amended, revised or replaced from time to time.
Notwithstanding the foregoing, the parties intend that the terms used
herein which are defined in the Uniform Commercial Code have, at all
times, the broadest and most inclusive meanings possible. Accordingly,
if the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more broadly or inclusively
than the Uniform Commercial Code in effect on the date of this
Agreement, then such term, as used herein, shall be given such
broadened meaning. If the Uniform Commercial Code shall in the future
be amended or held by a court to define any term used herein more
narrowly, or less inclusively, than the Uniform Commercial Code in
effect on the date of this Agreement, such amendment or holding shall
be disregarded in defining terms used in this Agreement.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
5.15 Debtor represents and warrants that Debtor's exact name is the name
set forth in this Agreement. Debtor further represents and warrants
the following and agrees that Debtor is, and at all times shall be,
located in the following place: ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Debtor is a registered organization organized under the laws of the
United States, and Debtor is located in the state that United States
law designates as its location or, if United States law authorizes the
Debtor to designate the state for its location, the state designated
by Debtor, or if neither of the foregoing are applicable, at the
District of Columbia. Based on the foregoing, Debtor is located (as
determined pursuant to the Uniform Commercial Code) in the State of
Delaware.
The Collateral is located and shall be maintained at the following
location(s)
-------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce
8
this Agreement or in exercising or attempting to exercise any right or
remedy under this Agreement or incurred in any other matter or
proceeding relating to this Security Agreement.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS
BUSINESS AND COMMERCE CODE) REPRESENTS 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.
8. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*NONE, IF LEFT BLANK)
DEBTOR: BANK:
▇▇▇▇▇▇ GROUP, INC. COMERICA BANK-TEXAS,
a Texas banking association
By:
-------------------------------------
Name: By:
-------------------------------- ------------------------------
Title: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- Vice President
9
SCHEDULE I
COLLATERAL
------------------------------------------------------------------------------------------------------------------------------
ISSUER OWNER OF STOCK TYPE OF STOCK OR NUMBER OF CERTIFICATE
EQUITY INTEREST SHARES NUMBERS
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group of Louisiana, Inc. ▇▇▇▇▇▇ Group, Inc. 100% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group of Sweden, Inc. ▇▇▇▇▇▇ Group, Inc. 100% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
Interlink Technologies, Inc. ▇▇▇▇▇▇ Group, Inc. 100% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group (Suisse) GmbH ▇▇▇▇▇▇ Group, Inc. 65% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group Hong Kong ▇▇▇▇▇▇ Group, Inc. 65% capital voting
Limited stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group Asia PTE LTD ▇▇▇▇▇▇ Group, Inc. 65% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group (Suisse Results) ▇▇▇▇▇▇ Group, Inc. 65% capital voting
GmbH stock
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group GmbH ▇▇▇▇▇▇ Group, Inc. 65% capital voting
stock
------------------------------------------------------------------------------------------------------------------------------
12
[COMERICA LOGO] SECURITY AGREEMENT
(Intellectual Property)
As of March 29, 2002, for value received, the undersigned ("Debtor") pledges,
assigns and grants to Comerica Bank-Texas, a Texas banking association ("Bank"),
whose address is ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a continuing security interest and lien (any pledge,
assignment, security interest or other lien arising hereunder is sometimes
referred to herein as a "security interest") in the Collateral (as defined
below) to secure payment when due, whether by stated maturity, demand,
acceleration or otherwise, of all existing and future indebtedness
("Indebtedness") to the Bank of ▇▇▇▇▇▇ Group, Inc. ("Borrower") and/or Debtor.
Indebtedness includes without limit any and all obligations or liabilities of
the Borrower and/or Debtor to the Bank, whether absolute or contingent, direct
or indirect, voluntary or involuntary, liquidated or unliquidated, joint or
several, known or unknown, originally payable to the Bank or to a third party
and subsequently acquired by the Bank including, without limitation, any late
charges, loan fees or charges, and overdraft indebtedness, any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of any security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorneys'
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorneys'
fees shall be deemed a reference to reasonable fees, costs, and expenses of
counsel and paralegals, whether inside or outside counsel is used, whether or
not a suit or action is instituted, and to court costs if a suit or action is
instituted, and whether attorneys' fees or court costs are incurred at the trial
court level, on appeal, in a bankruptcy, administrative or probate proceeding or
otherwise.
1. COLLATERAL shall mean all of the following property Debtor now or later
owns or has an interest in, wherever located:
(a) Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether
or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held, including without limitation
those set forth on EXHIBIT A attached hereto (collectively, the
"Copyrights");
(b) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products nor or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to Debtor now or
hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including
without limitation the patents and patent applications set forth on
EXHIBIT B attached hereto (collectively, the "Patents")
(e) Any trademark or servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Debtor
connected with and symbolized by such trademarks, including without
limitation those set forth on EXHIBIT C attached hereto (collectively,
the "Trademarks");
(f) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but
not the obligation, to ▇▇▇ for and collect such damages for said use
or infringement of the intellectual property rights identified above;
(g) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(h) All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks or Patents;
(i) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing;
(j) all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property
(except real property which is not a fixture) which are now or later
in possession or control of Bank, or as to which Bank now or later
controls possession by documents or otherwise, and
(k) all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of
any kind (including but not limited to stock splits, stock rights,
voting and preferential rights), products, and proceeds of or
pertaining to the above including, without limit, cash or other
property which were proceeds and are recovered by a bankruptcy trustee
or otherwise as a preferential transfer by Debtor.
2. WARRANTIES, COVENANTS AND AGREEMENTS. Debtor warrants, covenants and agrees
as follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
request, any information Bank may reasonably request and allow Bank to
examine, inspect, and copy any of Debtor's books and records and allow
Bank to visit and inspect any of Debtor's plants or facilities that
manufacture, install or store products (or that have done so during
the prior 6 month period) that are sold utilizing any of the
Collateral and to inspect the products and quality control records
relating thereto. Debtor shall, at the request of Bank, ▇▇▇▇ its
records and the Collateral to clearly indicate the security interest
of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject
to a security interest in favor of Bank, Debtor shall be deemed to
have warranted that (a) Debtor is the lawful owner of the Collateral
and has the right and authority to subject it to a security interest
granted to Bank; (b) none of the Collateral is subject to any security
interest other than that in favor of Bank and there are no financing
statements on file, other than in favor of Bank; and (c) Debtor
acquired its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor will keep the Collateral free at all times from all claims,
liens, security interests and encumbrances other than those in favor
of Bank. Debtor will not, without the prior written consent of Bank,
sell, transfer or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except for non-exclusive licenses
granted by Debtor in the ordinary course of business. Bank or its
representatives may at all reasonable times inspect the Collateral and
may enter upon all premises where the Collateral is kept or might be
located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue a
perfected and first security interest of Bank in the Collateral.
Debtor agrees that Bank has no obligation to acquire or perfect any
lien on or security interest in any asset(s), whether realty or
personalty, to secure payment of the Indebtedness, and Debtor is not
relying upon assets in which the Bank may have a lien or security
interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest
or penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded in
a manner satisfactory to Bank. If Debtor fails to pay any of these
taxes, assessments, or other charges in the time provided above, Bank
has the option (but not the obligation) to do so, and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest lawful default rate which could
be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will protect it
from loss, damage, or deterioration from any cause. Debtor has and
will maintain at all times (a) with respect to the Collateral,
insurance under an "all risk" policy against fire and other risks
customarily insured against, and (b) public liability insurance and
other insurance as may be required by law or reasonably required by
Bank, all of which insurance shall be in amount, form and content, and
written by companies as may be satisfactory to Bank, containing a
lender's loss payable endorsement acceptable to Bank. Debtor will
deliver to Bank immediately upon demand evidence satisfactory to Bank
that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all
2
amounts so expended by Bank immediately upon demand, together with
interest at the highest lawful default rate which could be charged by
Bank on any Indebtedness.
2.7 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.8 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to Bank. Any
proceeds of Collateral coming into Debtor's possession as a result of
any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.9 At any time and without notice, Bank may (a) cause any or all of the
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of the
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral, and
accept other property in exchange for the Collateral and hold or apply
the property or money so received pursuant to this Agreement.
2.10 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of Bank under this
Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.11 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying on any information furnished
by Bank. Debtor assumes full responsibility for obtaining any further
information concerning the Borrower's financial condition, the status
of the Indebtedness or any other matter which the undersigned may deem
necessary or appropriate now or later. Debtor waives any duty on the
part of Bank, and agrees that Debtor is not relying upon nor expecting
Bank to disclose to Debtor any fact now or later known by Bank,
whether relating to the operations or condition of Borrower, the
existence, liabilities or financial condition of any guarantor of the
Indebtedness, the occurrence of any default with respect to the
Indebtedness, or otherwise, notwithstanding any effect such fact may
have upon Debtor's risk or Debtor's rights against Borrower. Debtor
knowingly accepts the full range of risk encompassed in this
Agreement, which risk includes without limit the possibility that
Borrower may incur Indebtedness to Bank after the financial condition
of Borrower, or Borrower's ability to pay debts as they mature, has
deteriorated.
2.12 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted violation of any
law, including, without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES,
FINES, EXPENSES, LIABILITIES OR CAUSES OF ACTION OF WHATEVER KIND
RESULTING FROM BANK'S OWN NEGLIGENCE, except and to the extent (but
only to the extent) caused by Bank's gross negligence or willful
misconduct.
3
2.13 Debtor is now the sole owner of the Collateral, except for
non-exclusive licenses granted by Debtor to its customers in the
ordinary course of business.
2.14 Performance of this Security Agreement does not conflict with or
result in a breach of any agreement to which Debtor is party or by
which Debtor is bound, except to the extent that certain intellectual
property agreements prohibit the assignment of the rights thereunder
to a third party without the licensor's or other party's consent and
this Security Agreement constitutes an assignment.
2.15 Each of the Patents is valid and enforceable, and no part of the
Collateral has been judged invalid or unenforceable, in whole or in
part, and no claim has been made that any part of the Collateral
violates the rights of any third party.
2.16 Debtor shall deliver to Bank within thirty (30) days of the last day
of each fiscal quarter, a report signed by Debtor, in form acceptable
to Bank, listing any applications or registrations that Debtor has
made or filed in respect of any patents, copyrights or trademarks and
the status of any outstanding applications or registrations. Debtor
shall promptly advise Bank of any material change in the composition
of the Collateral, including but not limited to any subsequent
ownership right of the Debtor in or to any Trademark, Patent or
Copyright not specified in this Security Agreement.
2.17 Debtor shall (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights, (ii) use its
best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Bank in writing of material
infringements detected and (iii) not allow any Trademarks, Patents or
Copyrights to be abandoned, forfeited or dedicated to the public
without the written consent of Bank, which shall not be unreasonably
withheld, unless Debtor determines that reasonable business practices
suggest that abandonment is appropriate.
2.18 Debtor shall register or cause to be registered (to the extent not
already registered) with the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, those
intellectual property rights listed on EXHIBITS A, B and C hereto
within thirty (30) days of the date of this Security Agreement. Debtor
shall register or cause to be registered with the United States Patent
and Trademark Office or the United States Copyright Office, as
applicable, those additional intellectual property rights developed or
acquired by Debtor from time to time in connection with any product
prior to the sale or licensing of such product to any third party
(including without limitation revisions or additions to the
intellectual property rights listed on such EXHIBITS A, B and C).
Debtor shall, from time to time, execute and file such other
instruments, and take such further actions as Bank may reasonably
request from time to time to perfect or continue the perfection of
Bank's interest in the Collateral.
2.19 This Security Agreement creates, and in the case of after-acquired
Collateral, this Security Agreement will create at the time Debtor
first has rights in such after-acquired Collateral, in favor of Bank a
valid and perfected first priority security interest in the Collateral
in the United States securing the payment and performance of the
Indebtedness upon making the filings referred to below.
2.20 Except for, and upon, the filing with the United States Patent and
Trademark office with respect to the Patents and Trademarks and the
Register of Copyrights with respect to the Copyrights necessary to
perfect the security interests created hereunder, and except as has
been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental
authority or U.S. regulatory body is required either (a) for the grant
by Debtor of the security interest granted hereby or for the
execution, delivery or performance of this Security Agreement by
Debtor in the U.S. or (b) for the perfection in the United States or
the exercise by Bank of its rights and remedies hereunder;
2.21 All information heretofore, herein or hereafter supplied to Bank by or
on behalf of Debtor with respect to the Collateral is accurate and
complete in all material respects;
2.22 Debtor shall not enter into any agreement that would materially impair
or conflict with Debtor's obligations hereunder without Bank's prior
written consent. Debtor shall not permit the inclusion in any material
contract to which it becomes a party of any provisions that could or
might in any way prevent the creation of a security interest in
Debtor's rights and interests in any property included within the
definition of the Collateral acquired
4
under such contracts, except that certain contracts may contain
anti-assignment provisions that could in effect prohibit the creation
of a security interest in such contracts if Debtor is required, in its
commercially reasonable judgment to accept such provisions; and
2.23 Upon any executive officer of Debtor obtaining knowledge thereof,
Debtor will promptly notify Bank in writing of any event that
materially adversely affects the value of any of the Collateral, the
ability of Debtor to dispose of any Collateral or the rights and
remedies of Bank in relation thereto, including the levy of any legal
process against any of the Collateral.
3. COLLECTION OF PROCEEDS.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, or as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
4. DEFAULTS, ENFORCEMENT AND APPLICATION OF PROCEEDS.
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this Agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration or
otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any of
the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any Collateral;
or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or voluntary
suspension of the transaction of business by Borrower, Debtor, or
any Guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure, or
assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a
5
receiver, trustee, court appointee, sequestrator or otherwise,
for all or any part of the property of Borrower, Debtor, or any
Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment of
the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or
(g) An event of default shall occur under any instrument, agreement
or other document evidencing, securing or otherwise relating to
any of the Indebtedness.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have and
may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:
(a) Exercise all the rights and remedies upon default, in foreclosure
and otherwise, available to secured parties under the provisions
of the Uniform Commercial Code and other applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a receiver,
enter upon any premises where Collateral may then be located, and
take possession of all or any of it and/or render it unusable;
and without being responsible for loss or damage to such
Collateral, hold, operate, sell, lease, or dispose of all or any
Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and
conditions as Bank may deem fit, without any previous demand or
advertisement; and except as provided in this Agreement, all
notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption,
and any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of Bank to sell, lease, or
otherwise dispose of the Collateral or as to the application by
Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
expressly waived by Debtor to the fullest extent permitted.
(e) Use and enjoy a nonexclusive, royalty-free license to use the
Copyrights, Patents and Trademarks.
At any sale pursuant to this Section 4.2, whether under the power of
sale, by virtue of judicial proceedings or otherwise, it shall not be
necessary for Bank or a public officer under order of a court to have
present physical or constructive possession of Collateral to be sold.
The recitals contained in any conveyances and receipts made and given
by Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy of the
matters stated (including, without limit, as to the amounts of the
principal of and interest on the Indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer
making the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money, and the
purchaser shall not be obligated to see to the application of the
money. Any sale of any Collateral under this Agreement shall be a
perpetual bar against Debtor with respect to that Collateral.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
6
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank in such order as the Bank,
in its discretion, deems appropriate including, without limitation,
the following order: first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorneys' fees and legal expenses
incurred by Bank; the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first
to interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor shall
remain liable for any deficiency, which it shall pay to Bank
immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law or in
equity for the collection of the Indebtedness or for the recovery of
any other sum to which Bank may be entitled for the breach of this
Agreement by Debtor. Nothing in this Agreement shall reduce or release
in any way any rights or security interests of Bank contained in any
existing agreement between Borrower, Debtor, or any Guarantor and
Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor:
(a) to demand, receive, ▇▇▇ for, and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of the
Collateral;
(b) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement, and Debtor further
authorizes and requests that the Register of Copyrights and the
Commissioner of Patents and Trademarks record this Security
Agreement; and
(c) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
(d) to modify, in its sole discretion, this Security Agreement
without first obtaining Debtor's approval of or signature to such
modification by amending EXHIBIT A, EXHIBIT B and EXHIBIT C
hereof, as appropriate, to include reference to any right, title
or interest in any Copyrights, Patents or Trademarks acquired by
Debtor after the execution hereof or to delete any reference to
any right, title or interest in any Copyrights, Patents or
Trademarks in which Debtor no longer has or claims any right,
title or interest.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
5. MISCELLANEOUS.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, chief executive office
location, principal place of business location, and/or location of any
Collateral, but the giving of this notice shall not cure any Event of
Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
7
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor or the Indebtedness to the Bank's
parent, affiliates, subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone. Any such action shall not constitute acceptance of
Collateral in discharge of any portion of the Indebtedness.
5.6 Debtor, to the extent not expressly prohibited by applicable law,
waives any right to require the Bank to: (a) proceed against any
person or property; (b) give any notice of sale in a manner or at such
time other than as required by Sections 9.611, 9.612 and 9.613 of the
Uniform Commercial Code; or (c) pursue any other remedy in the Bank's
power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of
dishonor, notice of default, notice of intent to accelerate or demand
payment or notice of acceleration of any Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled,
and diligence in collecting any Indebtedness, and agree(s) that the
Bank may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or other document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts paid
or the value of any Collateral given by Debtor pursuant to this
Agreement until such time as all of the Indebtedness has been fully
paid.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least five days
before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any
public sale or of the time after which any private sale, lease, or
other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier. The mailing shall be by overnight courier,
certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not Bank
relied upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do so
shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the
8
Indebtedness or any portion of it, and shall bind Debtor and the
heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities given
to or conferred upon Bank are made or given jointly and severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or, absent
definition in Article 9, in any other Article) of the Uniform
Commercial Code. "Uniform Commercial Code" means the Texas Business
and Commerce Code as amended.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
5.15 Debtor's chief executive office and its principal place of business is
located and shall be maintained at
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
--------------------------------------------------------------------
STREET ADDRESS
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------
CITY STATE ZIP CODE
If Collateral is located at other than the address specified above,
such Collateral is located and shall be maintained at
--------------------------------------------------------------------
STREET ADDRESS
--------------------------------------------------------------------
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a termination
statement in accordance with the applicable provisions of the Uniform
Commercial Code, but the obligations contained in Section 2.13 of this
Agreement shall survive termination.
5.18 Debtor agrees to reimburse the Bank upon demand for any and all costs
and expenses (including, without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy,
probate or administrative proceeding or otherwise) incurred in
enforcing or attempting to enforce this Security Agreement or in
exercising or attempting to exercise any right or remedy under this
Agreement or incurred in any other matter or proceeding relating to
this Security Agreement.
9
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS
BUSINESS AND COMMERCE CODE) REPRESENTS 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.
8. SPECIAL PROVISIONS APPLICABLE TO THIS AGREEMENT. (*NONE, IF LEFT BLANK)
DEBTOR:
▇▇▇▇▇▇ Group, Inc.
By:
------------------------
SIGNATURE OF
Its:
-----------------------
TITLE (if applicable)
BANK:
Comerica Bank-Texas,
a Texas banking association
By:
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
10
SECURITY INTEREST ASSIGNMENT
THIS SECURITY INTEREST ASSIGNMENT (this "ASSIGNMENT"), dated as of
March 29, 2002, is executed by ▇▇▇▇▇▇ Group, Inc., a Delaware corporation (the
"BORROWER"), whose address is ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇, in favor of Comerica Bank-Texas, a Texas banking association (the
"LENDER").
R E C I T A L S:
The Borrower and Lender have entered into that certain First Amended and
Restated Revolving Credit Loan Agreement dated as of December 4, 1996 (as the
same has been or may hereafter be amended, supplemented, modified or restated
from time to time, the "LOAN AGREEMENT"), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by the Lender to the
Borrower;
A. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Loan Agreement or the Security Agreement (hereinafter
defined);
B. Lender has conditioned its obligations under the Loan Agreement upon
the execution and delivery of this Assignment by Borrower. Pursuant to the Loan
Agreement, and as Collateral for the Loan, the Borrower has entered into that
certain Security Agreement (Intellectual Property) dated on or about the date
hereof (as the same may be amended, supplemented, modified or changed from time
to time, the "SECURITY AGREEMENT"), pursuant to which the Borrower has or will
grant to the Lender a lien on and security interest in certain Collateral
described therein, including, but not limited to the following (collectively,
the "INTELLECTUAL PROPERTY"):
1. Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or
not the same also constitutes a trade secret, now or hereafter existing,
created, acquired or held, including without limitation those set forth on
EXHIBIT A attached hereto (collectively, the "COPYRIGHTS");
2. Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products nor or hereafter
existing, created, acquired or held;
3. Any and all design rights which may be available to Borrower now
or hereafter existing, created, acquired or held;
4. All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including
without limitation the patents and patent applications set forth on
EXHIBIT B attached hereto (collectively, the "PATENTS")
5. Any trademark or servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks, including without limitation those
set forth on EXHIBIT C attached hereto (collectively, the "TRADEMARKS");
6. Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not
the obligation, to ▇▇▇ for and collect such damages for said use or
infringement of the intellectual property rights identified above;
7. All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such
use to the extent permitted by such license or rights;
8. All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks or Patents;
9. All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing;
10. all goods, instruments, documents, policies and certificates of
insurance, deposits, money, investment property or other property (except
real property which is not a fixture) which are now or later in possession
or control of Bank, or as to which Bank now or later controls possession by
documents or otherwise, and
11. all additions, attachments, accessions, parts, replacements,
substitutions, renewals, interest, dividends, distributions, rights of any
kind (including but not limited to stock splits, stock rights, voting and
preferential rights), products, and proceeds of or pertaining to the above
including, without limit, cash or other property which were proceeds and
are recovered by a bankruptcy trustee or otherwise as a preferential
transfer by Borrower.
C. It is a condition precedent to the Lender's obligations in connection
with the Loan that the parties hereto execute this Assignment to memorialize the
granting of the security interest in and to the Intellectual Property in a form
suitable for recording this document with any legal entity.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and subject to the terms and
conditions of the Security Agreement, the parties hereto agree as follows:
1. Borrower hereby grants and assigns a security interest, and
ratifies and confirms the grant of a security interest pursuant to the
Security Agreement, to Lender, as Collateral for the payment and
performance of the Indebtedness (as defined in the Loan Agreement) in and
to Borrower's entire right, title and interest in the Intellectual Property
as defined herein, including without limitation all renewals thereof, all
proceeds thereof
-2-
(including, but not limited to, all license royalties and proceeds of
infringement suits), and the right to ▇▇▇ for past, present and future
infringements.
2. At such time as (i) all of the Indebtedness has been completely
paid and performed in full, and (ii) the Revolving Credit Commitment, the
Term Loan, and any other commitments described in the Loan Agreement, have
been terminated, the Lender shall release its security interest in
Borrower's entire right, title and interest in the Intellectual Property,
including without limitation all renewals thereof, all proceeds thereof
(including, but not limited to, all license royalties and proceeds of
infringement suits), and the right to ▇▇▇ for past, present and future
infringements.
3. Borrower represents and warrants that it has the full right and
power to make the assignment of the Intellectual Property, and it has not
made any previous assignment, transfer, agreement in conflict herewith or
constituting a present or future assignment of or encumbrance on the
Intellectual Property, other than the Permitted Liens.
4. This Assignment cannot be altered, amended or modified in any
way, except by a writing signed by Lender and Borrower. This Assignment
shall be binding upon Borrower and its respective successors and permitted
assigns, and shall inure to the benefit of Lender and its respective
successors and assigns. THIS ASSIGNMENT SHALL, EXCEPT TO THE EXTENT THAT
THE LAWS OF ANOTHER STATE APPLY TO THE INTELLECTUAL PROPERTY OR ANY PART
THEREOF, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. By
receiving this Assignment, Lender is entitled to receive all of the
benefits and none of the obligations and liabilities which may arise from a
security interest in the Intellectual Property.
5. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Any facsimile copy, other copy or
reproduction of a signed counterpart original of this Agreement shall be as
fully effective and binding as the original signed counterpart of this
Agreement.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
-3-
IN WITNESS WHEREOF, this Assignment has been executed as of the day and
year first written above.
BORROWER:
▇▇▇▇▇▇ GROUP, INC.
By:
------------------------------------
Name:
--------------------------------------
Title:
------------------------------
Address:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LENDER:
COMERICA BANK-TEXAS
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
Address:
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
-4-
THE STATE OF TEXAS Section
Section
COUNTY OF__________ Section
Before me ____________________ on this day personally appeared____________,
________________ of ▇▇▇▇▇▇ Group, Inc., a Delaware corporation, known to me to
be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same, on behalf of said corporation, for
the purposes and consideration therein expressed.
Given under my hand and seal this ____ day of March, 2002.
[S E A L]
--------------------------------------------
Notary Public - State of Texas
My Commission Expires:
--------------------------------------------
Printed Name of Notary Public
------------------------
THE STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section
Before me ________________ on this day personally appeared
_____________________________, __________________________ of Comerica
Bank-Texas, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same, on behalf
of said association, for the purposes and consideration therein expressed.
Given under my hand and seal office this ____ day of March, 2002.
[S E A L]
--------------------------------------------
Notary Public - State of Texas
My Commission Expires:
--------------------------------------------
Printed Name of Notary Public
------------------------
-5-
EXHIBIT A
COPYRIGHTS
EXHIBIT B
PATENTS
EXHIBIT C
TRADEMARKS
-------------------------------------------------------------------------------------------
U.S. APPLICATIONS FILING DATE
-----------------
TRADE ▇▇▇▇ SERIAL NO. (REG. DT.) REGISTRATION NO.
-------------------------------------------------------------------------------------------
OPTTIMIZE 76/142,388 10/06/00 Awaiting Notice of
Publication
-------------------------------------------------------------------------------------------
TCT 74/105,681 10/15/90 1,707,129
08/11/92
-------------------------------------------------------------------------------------------
THE RESULTS COMPANY 75/685,814 04/15/99
-------------------------------------------------------------------------------------------
TOTAL CYCLE TIME 74/090,544 08/23/90 1,892,079
05/02/95
-------------------------------------------------------------------------------------------
Process Value Management
-------------------------------------------------------------------------------------------
PVM
-------------------------------------------------------------------------------------------
Process Entitlement
-------------------------------------------------------------------------------------------
Process Strategy Map
-------------------------------------------------------------------------------------------
Supply Chain Process Value
-------------------------------------------------------------------------------------------
[COMERICA LOGO] ADVANCE FORMULA AGREEMENT
As of March 29, 2002, this Agreement is made between ▇▇▇▇▇▇ GROUP, INC.
("Borrower" or "Debtor") and COMERICA BANK-TEXAS, a Texas banking association
("Bank").
For and in consideration of the loans and other credit which Borrower may now or
hereafter obtain or request from Bank which are secured pursuant to the security
agreements and other agreements as may be executed and delivered by Borrower
from time to time for the benefit of Bank, and for other good and valuable
consideration, Borrower agrees as follows:
1. FORMULA LOANS. The credit which Bank may now or hereafter extend to
Borrower subject to the limitations of this Agreement and to the conditions
and limitations of any other agreement between Borrower and Bank is
identified as follows:
Revolving line of credit of up to $2,500,000, as evidenced in that
certain Amended and Restated Revolving Credit Note of even date
herewith in the amount of $2,500,000 executed by the Borrower and
payable to the order of the Bank (as the same has been and may
hereafter be amended, restated, increased, extended or otherwise
modified ("the Note"),
and any extensions, renewals or substitutions, whether in a greater or
lesser amount, including any letters of credit issued thereunder ("Formula
Loans"). The aggregate principal amount of the Formula Loans outstanding
can never exceed the lesser of (a) $2,500,000, or (b) the sum resulting
from the limited terms set forth in Paragraph 2 below. Reference is made to
that certain First Amended and Restated Revolving Credit Loan Agreement
dated as of December 4, 1996 executed between the Borrower and the Bank (as
the same has been or may hereafter be amended, restated, or modified from
time to time, the "Loan Agreement") for a statement of other terms and
conditions of the Note. Capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Loan Agreement.
2. ADVANCE FORMULA. Borrower warrants and agrees that Borrower's Indebtedness
to Bank for the Formula Loans shall never exceed the percentage of the
Eligible Accounts (as hereinafter defined) of the Debtor as set forth below
during the corresponding period set forth below:
PERIOD PERCENTAGE OF ELIGIBLE ACCOUNTS
------ -------------------------------
From March 26, 2002 through May 31, 2002 85%
From June 1, 2002 through June 30, 2002 80%
From July 1, 2002 through the Termination Date 75%
3. FORMULA COMPLIANCE. If the limitations in paragraph 2 above are exceeded at
any time, Borrower shall immediately pay Bank sums sufficient to reduce the
Formula Loans by the amount of such excess.
4. ELIGIBLE ACCOUNT. "Eligible Account" shall mean an Account (as hereinafter
defined) arising in the ordinary course of a Debtor's business which meets
each of the following requirements:
(a) it is owing less than ninety (90) days after the date of the original
invoice or other writing evidencing such Account; or
(b) it is from an Account Debtor (i) maintaining its chief executive
office in the United States of America or Canada, or (ii) organized
under the laws of the United States of America (or any state thereof)
or Canada;
(c) it arises from the sale of goods, or from services rendered;
(d) it is evidenced by an invoice;
(e) it is a valid, legally enforceable obligation of the Account Debtor;
(f) it is subject to a first priority, properly perfected security
interest in favor of Bank and is not subject to any sale of accounts,
any rights of offset, assignment, lien or security interest whatsoever
other than to Bank;
(g) it is not owing by a subsidiary or affiliate of Borrower or a Debtor.
For purposes of this Agreement, an "Account" shall mean any right of a
Debtor to payment for goods sold or leased or for services rendered,
but shall not include interest or service charges, and "Account Debtor"
shall mean a person who is obligated on or under an Account. An Account
which is at any time an Eligible Account, but which subsequently fails
to meet any of the foregoing requirements, shall forthwith cease to be
an Eligible Account.
5. CERTIFICATES, SCHEDULES AND REPORTS. Borrower shall be required to prepare
and deliver to the Bank such certificates, schedules, and reports as are
required in the Loan Agreement.
6. INSPECTIONS; COMPLIANCE. Borrower and each Debtor shall permit Bank and its
designees from time to time to make such inspections and audits, and to
obtain such confirmations or other information, with respect to any of the
Collateral or any Account Debtor as Bank is entitled to make or obtain
under the Loan Agreement or Security Agreement, and shall reimburse Bank on
demand for all costs and expenses incurred by Bank in connection with such
inspections and audits. Borrower and each Debtor shall further comply with
all of the other terms and conditions of the Security Agreement.
7. DEFAULT. Any failure by Borrower or a Debtor to comply with this Agreement
shall constitute an "Event of Default" under the Formula Loans and under
the Loan Agreement, the other loan documents relating thereto, and the
Indebtedness described therein.
8. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or terminated
only in writing duly executed by Borrower and Bank. No delay by Bank in
requiring Borrower's compliance herewith shall constitute a waiver of such
right. The rights granted to Bank hereunder are cumulative, and in addition
to any other rights Bank may have by agreement or under applicable law.
This Agreement shall supersede and replace in their entirety any prior
advance formula agreements in effect between Bank and Borrower. This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of Texas, without regard to conflict of laws
principles.
9. DISCRETIONARY/DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the
contrary set forth in this Agreement, in the event that the Formula Loans
are at any time on a demand basis or advances are subject to the Bank's
discretion, Borrower and Debtor hereby acknowledges and agrees that the
formula set forth in paragraph 2 hereof is merely for advisory and guidance
purposes and Bank shall not be obligated to make any loans or advances
under the Formula Loans, and, notwithstanding the terms of paragraph 3
above, Bank may at any time, at its option, demand payment of any or all of
the Formula Loans, whereupon the same shall become due and payable.
10. DILUTION OF ACCOUNTS. In the event the Bank, at any time in its sole
discretion, determines that the dollar amount of Eligible Accounts
collectable by a Debtor is reduced or diluted as a result of discounts or
rebates granted by a Debtor to the respective Account Debtor, returned or
rejected Inventory or services, or such other reason or factor as Bank
deems applicable, Bank may, in its sole discretion, upon five (5) business
days' prior written notice to Borrower, reduce or other wise modify the
percentage of Eligible Accounts included within the Advance Formula under
paragraph 2(a) above and/or reduce the dollar amount of the applicable
Debtor's Eligible Accounts by an amount determined by Bank in its sole
discretion.
11. JURY WAIVER. BORROWER AND DEBTOR(S) AND BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
AGREEMENT OR THE INDEBTEDNESS.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
2
Borrower's Chief Executive Office Address: BORROWER:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
------------------------------
Name:
----------------------
Title:
---------------------
Accepted and Approved:
COMERICA BANK-TEXAS,
a Texas banking association
By:
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
3
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group (Suisse) GmbH ("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with Article
8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party
have been granted in order to perfect its security interest in the Securities,
are powers coupled with an interest and will neither be affected by the
dissolution or bankruptcy of Pledgor or by the lapse of time. The obligations of
Issuer herein described shall continue in effect until the security interest of
Secured Party in the Securities has been terminated and Secured Party has
notified Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
--------------------------------
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ President
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
--------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
c/▇ ▇▇▇▇▇▇ Group, Inc. ▇▇▇▇▇▇ GROUP (SUISSE) GMBH
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
2
EXHIBIT A
-------------------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
-------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group (Suisse) GmbH ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
stock Securities
-------------------------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group (Suisse Results) GmbH
("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with Article
8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party
have been granted in order to perfect its security interest in the Securities,
are powers coupled with an interest and will neither be affected by the
dissolution or bankruptcy of Pledgor or by the lapse of time. The obligations of
Issuer herein described shall continue in effect until the security interest of
Secured Party in the Securities has been terminated and Secured Party has
notified Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
----------------------------------
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ President
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
▇▇▇▇▇▇ GROUP (SUISSE RESULTS) GMBH
c/▇ ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
----------------------------
2
EXHIBIT A
-----------------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
-----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group (Suisse Results) ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
GmbH stock Securities
-----------------------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group GmbH ("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with
Article 8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party have
been granted in order to perfect its security interest in the Securities, are
powers coupled with an interest and will neither be affected by the dissolution
or bankruptcy of Pledgor or by the lapse of time. The obligations of Issuer
herein described shall continue in effect until the security interest of Secured
Party in the Securities has been terminated and Secured Party has notified
Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this Agreement
or waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ----------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Vice President
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
▇▇▇▇▇▇ GROUP GMBH
c/▇ ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
----------------------------
2
EXHIBIT A
--------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
--------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group GmbH ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
stock Securities
--------------------------------------------------------------------------------------------------------------
4
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group of Louisiana, Inc.
("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with
Article 8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party have
been granted in order to perfect its security interest in the Securities, are
powers coupled with an interest and will neither be affected by the dissolution
or bankruptcy of Pledgor or by the lapse of time. The obligations of Issuer
herein described shall continue in effect until the security interest of Secured
Party in the Securities has been terminated and Secured Party has notified
Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this Agreement
or waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ----------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Vice President
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC.
c/▇ ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
and Secretary
2
EXHIBIT A
--------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
--------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group of Louisiana, Inc. ▇▇▇▇▇▇ Group, Inc. 100% capital voting Uncertificated
stock Securities
--------------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO] NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED
SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group of Sweden, Inc. ("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with
Article 8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party have
been granted in order to perfect its security interest in the Securities, are
powers coupled with an interest and will neither be affected by the dissolution
or bankruptcy of Pledgor or by the lapse of time. The obligations of Issuer
herein described shall continue in effect until the security interest of Secured
Party in the Securities has been terminated and Secured Party has notified
Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this Agreement
or waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ----------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Vice President
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
c/▇ ▇▇▇▇▇▇ Group, Inc. ▇▇▇▇▇▇ GROUP (SUISSE) GMBH
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
2
EXHIBIT A
--------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
--------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group (Suisse) GmbH ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
stock Securities
--------------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group Asia PTE LTD ("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with
Article 8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party have
been granted in order to perfect its security interest in the Securities, are
powers coupled with an interest and will neither be affected by the dissolution
or bankruptcy of Pledgor or by the lapse of time. The obligations of Issuer
herein described shall continue in effect until the security interest of Secured
Party in the Securities has been terminated and Secured Party has notified
Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this Agreement
or waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
▇.▇. ▇▇▇ ▇▇▇▇▇▇ ---------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Vice President
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
---------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
▇▇▇▇▇▇ GROUP ASIA PTE LTD
c/▇ ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
----------------------------------
▇▇▇ ▇▇▇▇▇▇, Director
2
EXHIBIT A
--------------------------------------------------------------------------------------------------------------
PERCENTAGE
ISSUER OWNER OWNERSHIP AND NUMBER OF CERTIFICATE
OF STOCK TYPE OF STOCK OR SHARES NUMBERS
EQUITY INTEREST
--------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group Asia PTE LTD ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
stock Securities
--------------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO]
NOTICE OF PLEDGE AND CONTROL AGREEMENT (ISSUER OF UNCERTIFICATED SECURITY)
This Agreement dated as of March 29, 2002 is executed among Comerica Bank -
Texas, a Texas banking association ("Secured Party"), ▇▇▇▇▇▇ Group, Inc., a
Delaware corporation ("Pledgor"), and ▇▇▇▇▇▇ Group Hong Kong Limited ("Issuer").
RECITALS:
A. Pursuant to a Security Agreement (Negotiable Collateral) dated as of
March 29, 2002 executed by and between Secured Party and Pledgor ("Security
Agreement") Pledgor has granted Secured Party a security interest in and to
certain of the Investment Property (as defined in the Uniform Commercial Code as
adopted in the State of Texas, as amended "UCC") of Pledgor, and more
particularly, the uncertificated securities described on Exhibit A attached
hereto and incorporated herein for all purposes ("Securities").
B. By entering into this control agreement ("Agreement"), the parties are
perfecting the Secured Party's security interest in the Securities, and the
Secured Party shall have control over the Securities in accordance with Article
8 of the UCC.
C. By executing this Agreement, each party respectively represents,
warrants, and agrees to the following, with and for the benefit of the Secured
Party:
The parties agree as follows:
1. THE SECURITIES. Issuer hereby represents and warrants to Secured Party
and Pledgor that (a) the Securities have been established solely in the name of
Pledgor as recited above, (b) Exhibit A attached hereto is a complete and
accurate description of the Securities as of the date thereof, and (c) except
for the claims and interests of Secured Party and Pledgor in the Securities,
neither Pledgor nor Issuer has any knowledge of any other claim to or interest
in the Securities.
2. LIENS. Issuer hereby acknowledges the security interest in the
Securities granted to Secured Party by Pledgor. Issuer has not been served with
any notices of levy or other documents under which any other person claims any
interest in the Securities. Issuer has not received notice of any security
interest in or claim to the Securities, or any portion of the Securities, other
than this Agreement, and Issuer is not presently obligated to comply with any
notifications it may receive from anybody (except the Pledgor) directing Issuer
to register transfers of the Securities or to redeem the Securities (any such
notifications are referred to herein as "Instructions"). Issuer covenants and
agrees that it has not and will not hereafter agree with any third party that
Issuer will comply with instructions concerning the Securities originated by
such third party. Issuer will promptly notify Secured Party and Pledgor if any
person asserts any lien, security interest, encumbrance or adverse claim against
the Securities.
3. CONTROL. Issuer covenants and agrees that it will comply with
Instructions originated by Secured Party concerning all or any portion of the
Securities at any time without further consent by Pledgor. Without the prior
written consent of the Secured Party, Issuer will not comply or agree to comply
with any Instructions Issuer may receive from the Pledgor or any other person
with respect to all or any portion of the Securities.
4. DIVIDENDS. By execution of this Agreement, Issuer acknowledges and
agrees that (i) the Security Agreement created a security interest in dividends,
and (ii) the Secured Party may at any time and without notice receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of the Securities, and hold the same as Collateral (as such term is
defined in the Security Agreement), or apply the same to the Indebtedness (as
such term is defined in the Security Agreement), the manner and distribution of
the application to be in the sole discretion of Secured Party.
5. DUPLICATE STATEMENTS AND NOTICES. Issuer will send copies of all
statements, confirmations, notices of claims and other correspondence concerning
the Securities to Secured Party at the address set forth below.
6. TAX REPORTING. All items of income, gain, expense, and loss recognized
in the Securities shall be reported to the Internal Revenue Service and all
state and local taxing authorities under the name and taxpayer identification
number of Pledgor.
7. OTHER AGREEMENTS AND ISSUER'S JURISDICTION. In the event of a conflict
between this Agreement and any other agreement between the Issuer and the
Pledgor, the terms of this Agreement will prevail. Regardless of any provision
in such agreement, the State of Texas shall be deemed to be Issuer's location
for the purposes of this Agreement and the perfection and priority of Secured
Party's security interest in the Securities.
8. TERMINATION. The rights and powers granted herein to Secured Party
have been granted in order to perfect its security interest in the Securities,
are powers coupled with an interest and will neither be affected by the
dissolution or bankruptcy of Pledgor or by the lapse of time. The obligations of
Issuer herein described shall continue in effect until the security interest of
Secured Party in the Securities has been terminated and Secured Party has
notified Issuer of such termination in writing.
9. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder,
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
10. AMENDMENTS. No amendment, modification or termination of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by the party to be charged.
11. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and personal representatives.
12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
13. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of receipt is received or two
days after being sent by certified or registered United States mail, return
receipt requested, postage prepaid, addressed to the party at the address set
forth below next to such party's signature. Any party may change its address for
notices in the manner set forth above.
14. RULES OF CONSTRUCTION. In this Agreement, words in the singular number
include the plural, and in the plural include the singular. Words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender, and the word "or"
is disjunctive but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience and do not define,
limit or describe the scope or intent of the provisions of this Agreement.
15. CHOICE OF LAW. THE PARTIES HERETO AGREE THAT CERTAIN MATERIAL EVENTS,
OCCURRENCES AND TRANSACTIONS RELATING TO THIS AGREEMENT BEAR A REASONABLE
RELATIONSHIP TO THE STATE OF TEXAS. THE VALIDITY, TERMS, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THOSE LAWS OF THE STATE OF
TEXAS WHICH ARE APPLICABLE TO AGREEMENTS WHICH ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF TEXAS. THE SECURITIES ARE SUBJECT
TO ARTICLE 8 OF THE UCC.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
17. INDEMNIFICATION. Pledgor agrees to indemnify Secured Party, its
officers and employees, and hold it and them harmless for and from all claims,
losses, liabilities and expenses, including without limitation, reasonable legal
fees and expenses arising from any claim of any party resulting from actions
Secured Party takes in accordance with the provisions of this Agreement.
18. JURY WAIVER. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
Addresses: COMERICA BANK - TEXAS
Comerica Bank - Texas By:
▇.▇. ▇▇▇ ▇▇▇▇▇▇ -----------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Vice President
Attention: ▇▇▇▇▇ ▇▇▇▇
Address: PLEDGOR:
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ GROUP, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:
-----------------------------------
▇▇▇ ▇▇▇▇▇▇, CFO and Vice President
Address for each Issuer: ISSUER:
▇▇▇▇▇▇ GROUP HONG KONG LIMITED
c/▇ ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
-----------------------------------
▇▇▇ ▇▇▇▇▇▇, Director
2
EXHIBIT A
--------------------------------------------------------------------------------------------------------
PERCENTAGE
OWNER OWNERSHIP AND
ISSUER OF STOCK TYPE OF STOCK OR NUMBER OF CERTIFICATE
EQUITY INTEREST SHARES NUMBERS
--------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Group Hong Kong ▇▇▇▇▇▇ Group, Inc. 65% capital voting Uncertificated
Limited stock Securities
--------------------------------------------------------------------------------------------------------
3
[COMERICA LOGO] NO ORAL AGREEMENTS
This Agreement (the "Agreement") is executed as of March 29, 2002 by ▇▇▇▇▇▇
GROUP, INC. ("Borrower"), ▇▇▇▇▇▇ GROUP OF LOUISIANA, INC., ▇▇▇▇▇▇ GROUP OF
SWEDEN, INC., INTERLINK TECHNOLOGIES, INC. (collectively, the "Domestic
Subsidiaries"), and ▇▇▇▇▇▇ GROUP GMBH, ▇▇▇▇▇▇ GROUP (SUISSE) GMBH, ▇▇▇▇▇▇ GROUP
ASIA PTE LTD, ▇▇▇▇▇▇ GROUP HONG KONG LIMITED (collectively, the "Foreign
Subsidiaries") and COMERICA BANK - TEXAS, a Texas banking association
("Lender"), in connection with credit accommodations made by the Lender to the
Borrower (the "Loan").
The parties covenant and agree as follows:
(1) The rights and obligations of the parties shall be determined solely from
the written "Loan Agreement" (as such term is defined in Section 26.02(a)(2)
of the Texas Business and Commerce Code) executed and delivered in
connection with the Loan, and any oral agreements between or among the
parties are superseded by and merged into the Loan Agreement.
(2) The Loan Agreement has not been and may not be varied by any oral agreements
or discussions that have or may occur before, contemporaneously with, or
subsequent thereto.
(3) THE WRITTEN LOAN AGREEMENT REPRESENTS 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 AMONG THE PARTIES.
This Agreement, which may be executed in counterparts, is executed and
delivered as of the date first written above.
BORROWER: LENDER:
▇▇▇▇▇▇ GROUP, INC., COMERICA BANK - TEXAS
a Delaware corporation
By: By:
--------------------------------- ----------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------- Vice President
Its:
--------------------------------
DOMESTIC SUBSIDIARIES: FOREIGN SUBSIDIARIES:
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC. ▇▇▇▇▇▇ GROUP ASIA PTE LTD
By: By:
--------------------------------- ----------------------------------
Printed Name: Printed Name:
----------------------- ------------------------
Its: Its:
-------------------------------- ---------------------------------
▇▇▇▇▇▇ GROUP OF SWEDEN, INC. ▇▇▇▇▇▇ GROUP GMBH
By: By:
--------------------------------- ----------------------------------
Printed Name: Printed Name:
----------------------- ------------------------
Its: Its:
-------------------------------- ---------------------------------
INTERLINK TECHNOLOGIES, INC. ▇▇▇▇▇▇ GROUP HONG KONG LIMITED
By: By:
--------------------------------- ----------------------------------
Printed Name: Printed Name:
----------------------- ------------------------
Its: Its:
-------------------------------- ---------------------------------
▇▇▇▇▇▇ GROUP (SUISSE) GMBH
By:
----------------------------------
Printed Name:
------------------------
Its:
---------------------------------
OMNIBUS GENERAL CERTIFICATE
The undersigned persons, holding the respective offices as set forth in the
signatures of each of the respective undersigned entities, being ▇▇▇▇▇▇ GROUP,
INC. ("COMPANY"), a Delaware corporation, ▇▇▇▇▇▇ GROUP OF SWEDEN, INC.
("TGSWEDEN"), a Delaware corporation, ▇▇▇▇▇▇ GROUP OF LOUISIANA, INC. ("TGL"), a
Delaware corporation, ▇▇▇▇▇▇ GROUP (SUISSE) GMBH ("TGS"), a Swiss corporation,
▇▇▇▇▇▇ GROUP GMBH ("TGG"), a German corporation, ▇▇▇▇▇▇ GROUP ASIA PTE LTD
("TGASIA"), a Singapore corporation and ▇▇▇▇▇▇ GROUP HONG KONG, LIMITED
("TGHK"), a Hong Kong limited liability company, (a) hereby delivers this
Certificate in connection with that certain Third Amendment to First Amended and
Restated Revolving Credit Loan Agreement dated as of even date herewith (the
"AGREEMENT"), by and between Company and Comerica Bank-Texas ("LENDER"), a Texas
banking association, and related loan documents and (b) hereby certifies to
Lender, with the knowledge and intent that Lender may, without any investigation
on its part, rely fully upon the matters herein in connection with any extension
of credit to Company, that the following matters are true and correct on the
date hereof. Company, TGSweden, TGL, TGS, TGG, TGAsia and TGHK are sometimes
collectively referred to herein as the "CONSTITUENT COMPANIES."
1. RESOLUTIONS. Attached hereto as EXHIBIT A are true and correct copies of
resolutions relating to the agreements to be executed and delivered by each of
the Constituent Companies to Lender in connection with the Agreement and related
documents (collectively, the "SUBJECT AGREEMENTS"), which resolutions have been
duly adopted by the Board of Directors (or equivalent managing group, in the
case of TGS, TGG, TGAsia and TGHK) of each of the Constituent Companies, and
none of such resolutions have been amended, modified or repealed in any respect,
and all of such resolutions are in full force and effect on the date hereof.
2. INCUMBENCY. The individuals named on SCHEDULE I attached hereto are the
duly elected, qualified and acting officers, respectively, of each of the
Constituent Companies and hold the offices set forth opposite their respective
names as of the date hereof, and the signatures under the respective names and
titles of said officers are their true and authentic signatures.
3. INCORPORATION. The certificate of incorporation (or other equivalent
charter documents of the Constituent Companies), bylaws and all amendments
thereto which have been delivered to Lender, are still in full force and effect
and have not been amended.
4. ORGANIZATION, STANDING AND QUALIFICATION. Each of the Constituent
Companies (a) is duly organized, validly existing and in good standing under the
laws of the state (or nation, as the case may be) of organization (except that
Company, TGSweden, and TGL are not in good standing with the Delaware Secretary
of State), (b) has all requisite power, corporate or otherwise, to conduct
business and to execute and deliver, and perform its respective obligations
under, the Subject Agreements, and (c) is duly qualified to transact business as
a foreign corporation in each jurisdiction where the nature of its respective
property or assets (whether real, personal or mixed, or tangible or intangible),
or the conduct of business requires such qualification.
5. FULL DISCLOSURE. No information, exhibit or written report furnished by
or on behalf of any of the Constituent Companies to Lender in connection with
the negotiation or execution of the Subject Agreements, or the transactions
contemplated thereby, contains any material misstatement of fact or omits the
statement of a material fact necessary to make the statements contained therein
not misleading.
IN WITNESS WHEREOF, I have duly executed this Certificate as of
March 29, 2002.
▇▇▇▇▇▇ GROUP, INC. ▇▇▇▇▇▇ GROUP ASIA PTE LTD
By: By:
------------------------------- -------------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Vice President and Chief Financial Director
Officer
▇▇▇▇▇▇ GROUP GMBH ▇▇▇▇▇▇ GROUP OF SWEDEN, INC.
By: By:
------------------------------- -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Name
Managing Director Title
▇▇▇▇▇▇ GROUP (SUISSE) GMBH ▇▇▇▇▇▇ GROUP HONG KONG LIMITED
By: By:
------------------------------- -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Managing Director Director
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC.
By:
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Secretary
SCHEDULE I
NAME SIGNATURE ENTITY TITLE
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc. Chief Financial
------------------------ Officer,
Vice President
▇▇▇▇ ▇. ▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group of Louisiana, Inc.* Vice President,
Secretary
▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group of Sweden, Inc.* -----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group GmbH* Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group (Suisse) GmbH* Managing Director
▇▇▇ ▇▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group Asia PTE LTD* Director
▇▇▇ ▇▇▇▇▇▇
------------------------ ▇▇▇▇▇▇ Group Hong Kong, Limited* Director
This Schedule may be executed in one or more counterparts, each of which
shall be certified as follows:
The undersigned, ▇▇▇ ▇▇▇▇▇▇, hereby certifies each above signature to be
the authentic signature of the person whose name appears opposite such
signature.
-----------------------------------------------
▇▇▇ ▇▇▇▇▇▇, Secretary to ▇▇▇▇▇▇ Group, Inc.,
and authorized by the "*" entities to verify
the signatures above corresponding to the "*"
entity officers.
EXHIBIT A
RESOLUTIONS OF THE CONSTITUENT COMPANIES
[See Attached.]
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
▇▇▇▇▇▇ GROUP, INC.
(the "Corporation")
RESOLVED, that the Chairman of the Board, the President and any Vice
President of the Corporation, by the signature of any one or more of them, be,
and the same hereby are, authorized and directed to execute and deliver to
Comerica Bank-Texas (hereinafter referred to as "BANK") in the name of and on
behalf of the Corporation, with such changes in the terms and provisions thereof
as the officer executing same shall, in his sole discretion, deem advisable,
(i) a certain proposed Third Amendment to First Amended and Restated Revolving
Credit Loan Agreement (the "AMENDMENT") in such form as is approved by the
above-authorized officers; and (ii) such other agreements, instruments,
statements and writings as the officer or officers executing the same may deem
desirable or necessary in connection with any of the foregoing, and to incur on
behalf of the Corporation the obligations described in the Amendment; be it
RESOLVED FURTHER, that said agreements and other statements in writing
executed in the name and on behalf of the Corporation by the Chief Executive
Officer, President or any Vice President shall be presumed conclusively to be
the instruments, the execution of which is authorized by the resolutions; be it
RESOLVED FURTHER, that the aforementioned officers of the Corporation be,
and the same hereby are, authorized and directed to execute, in the name of and
on behalf of the Corporation, notes, deeds of trust, security agreement,
financing statements, assignments, collateral reports, loan statements,
confirmations of delivery, lien statements, pledge certificates, release
certificates, removal reports, guaranties, cross-collateralization agreements
and such other writings as are necessary in their dealings with Bank, and any
such papers executed by any of them prior to this time are approved, ratified
and confirmed; and that the Secretary and every Assistant Secretary of the
Corporation be, and they severally hereby are, instructed to provide Bank, from
time to time with lists of the persons who shall have been authorized by the
Corporation to take the above action; and that such designations communicated to
Bank shall continue in full force and effect until notice of revocation thereof
is communicated to Bank at least ten (10) days prior to the effective date of
termination of such authority; be it
RESOLVED FURTHER, that any officer of the Corporation, by his signature,
be, and the same hereby is, authorized and directed to certify to Bank the
adoption of these resolutions; and be it
RESOLVED FURTHER, that the aforementioned officers of the Corporation be,
and each of them hereby is, authorized, directed and empowered to do all other
things and acts, to execute and deliver all other instruments, documents and
certificates and to pay all costs, fees and taxes as may be, in their sole
judgment, necessary, proper or advisable in order to carry out or comply with
the purpose or intent of the foregoing resolutions; and that all of the acts and
deeds of the aforementioned officers of the Corporation which are consistent
with the purposes and intent of such resolutions be, and the same hereby are, in
all respect approved, confirmed and adopted as the acts and deeds of the
Corporation.
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
▇▇▇▇▇▇ GROUP SWEDEN, INC., AND
▇▇▇▇▇▇ GROUP OF LOUISIANA, INC.
(collectively, the "Corporation")
RESOLVED, that the President and any Vice President of the Corporation, by
the signature of any one or more of them, be, and the same hereby are,
authorized and directed to execute and deliver to Comerica Bank-Texas
(hereinafter referred to as "BANK") in the name of and on behalf of the
Corporation, with such changes in the terms and provisions thereof as the
officer executing same shall, in his sole discretion, deem advisable, (i) a
certain proposed Third Amended and Restated Revolving Credit Loan Agreement (the
"AMENDMENT") in such form as is approved by the above-authorized officers; and
(ii) such other agreements, instruments, statements and writings as the officer
or officers executing the same may deem desirable or necessary in connection
with any of the foregoing; be it
RESOLVED FURTHER, that said agreements and other statements in writing
executed in the name and on behalf of the Corporation by the Chairman of the
Board, President or any Vice President shall be presumed conclusively to be the
instruments, the execution of which is authorized by the resolutions; be it
RESOLVED FURTHER, that the Board of Directors of the Corporation has
determined that the benefits to be received under the Amendment as set forth in
these resolutions are at least equal to the potential exposure and risk to the
Corporation under the Amendment; be it
RESOLVED FURTHER, that the aforementioned officers of the Corporation be,
and the same hereby are, authorized and directed to execute, in the name of and
on behalf of the Corporation, such other writings as are necessary in their
dealings with Bank, and any such papers executed by any of them prior to this
time are approved, ratified and confirmed; and that the Secretary and every
Assistant Secretary of the Corporation be, and they severally hereby are,
instructed to provide Bank, from time to time with lists of the persons who
shall have been authorized by the Corporation to take the above action; and that
such designations communicated to Bank shall continue in full force and effect
until notice of revocation thereof is communicated to Bank at least ten
(10) days prior to the effective date of termination of such authority; be it
RESOLVED FURTHER, that any officer of the Corporation, by his signature,
be, and the same hereby is, authorized and directed to certify to Bank the
adoption of these resolutions; and be it
RESOLVED FURTHER, that the aforementioned officers of the Corporation be,
and each of them hereby is, authorized, directed and empowered to do all other
things and acts, to execute and deliver all other instruments, documents and
certificates and to pay all costs, fees and taxes as may be, in their sole
judgment, necessary, proper or advisable in order to carry out or comply with
the purpose or intent of the foregoing resolutions; and that all of the acts and
deeds of the aforementioned officers of the Corporation which are consistent
with the purposes and intent of such resolutions be, and the same hereby are, in
all respect approved, confirmed and adopted as the acts and deeds of the
Corporation.
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
▇▇▇▇▇▇ GROUP GMBH AND ▇▇▇▇▇▇
GROUP (SUISSE) GMBH
(collectively, the "Corporation")
RESOLVED, that the Managing Director of the Corporation, by his signature,
be, and the same hereby is, authorized and directed to execute and deliver to
Comerica Bank-Texas (hereinafter referred to as "BANK") in the name of and on
behalf of the Corporation, with such changes in the terms and provisions thereof
as the Managing Director executing same shall, in his sole discretion, deem
advisable, (i) a certain proposed Third Amendment to First Amended and Restated
Revolving Credit Loan Agreement (the "AMENDMENT") in such form as is approved by
the above-authorized Managing Directors; and (ii) such other agreements,
instruments, statements and writings as the Managing Director or Managing
Directors executing the same may deem desirable or necessary in connection with
any of the foregoing; be it
RESOLVED FURTHER, that said agreements and other statements in writing
executed in the name and on behalf of the Corporation by the Managing Director
shall be presumed conclusively to be the instruments, the execution of which is
authorized by the resolutions; be it
RESOLVED FURTHER, that the Board of Directors of the Corporation has
determined that the benefits to be received under the Amendment set forth in
these resolutions are at least equal to the potential exposure and risk to the
Corporation under the Amendment; be it
RESOLVED FURTHER, that the aforementioned Managing Director of the
Corporation be, and the same hereby is, authorized and directed to execute, in
the name of and on behalf of the Corporation, such other writings as are
necessary in their dealings with Bank, (and any such papers executed by any of
them prior to this time are approved, ratified and confirmed), and to provide
Bank, from time to time with lists of the persons who shall have been authorized
by the Corporation to take the above action; and that such designations
communicated to Bank shall continue in full force and effect until notice of
revocation thereof is communicated to Bank at least ten (10) days prior to the
effective date of termination of such authority; be it
RESOLVED FURTHER, that the Managing Director of the Corporation, by his
signature, be, and the same hereby is, authorized and directed to certify to
Bank the adoption of these resolutions; and be it
RESOLVED FURTHER, that the aforementioned Managing Director of the
Corporation be, and is, authorized, directed and empowered to do all other
things and acts, to execute and deliver all other instruments, documents and
certificates and to pay all costs, fees and taxes as may be, in their sole
judgment, necessary, proper or advisable in order to carry out or comply with
the purpose or intent of the foregoing resolutions; and that all of the acts and
deeds of the aforementioned Managing Director of the Corporation which are
consistent with the purposes and intent of such resolutions be, and the same
hereby are, in all respect approved, confirmed and adopted as the acts and deeds
of the Corporation.
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
▇▇▇▇▇▇ GROUP ASIA PRIVATE LIMITED AND
▇▇▇▇▇▇ GROUP HONG KONG, LIMITED
(collectively, the "Corporation")
RESOLVED, that any Director of the Corporation, by his signature, be, and
the same hereby is, authorized and directed to execute and deliver to Comerica
Bank-Texas (hereinafter referred to as "BANK") in the name of and on behalf of
the Corporation, with such changes in the terms and provisions thereof as the
Director executing same shall, in his sole discretion, deem advisable, (i) a
certain proposed Third Amendment to First Amended and Restated Revolving Credit
Loan Agreement (the "AMENDMENT") in such form as is approved by the
above-authorized Directors; and (ii) such other agreements, instruments,
statements and writings as the Director or Directors executing the same may deem
desirable or necessary in connection with any of the foregoing; be it
RESOLVED FURTHER, that said agreements and other statements in writing
executed in the name and on behalf of the Corporation by the Director shall be
presumed conclusively to be the instruments, the execution of which is
authorized by the resolutions; be it
RESOLVED FURTHER, that the Board of Directors of the Corporation has
determined that the benefits to be received under the Amendment set forth in
these resolutions are at least equal to the potential exposure and risk to the
Corporation under the Amendment; be it
RESOLVED FURTHER, that the aforementioned Director of the Corporation be,
and the same hereby is, authorized and directed to execute, in the name of and
on behalf of the Corporation, such other writings as are necessary in their
dealings with Bank, (and any such papers executed by any of them prior to this
time are approved, ratified and confirmed), and to provide Bank, from time to
time with lists of the persons who shall have been authorized by the Corporation
to take the above action; and that such designations communicated to Bank shall
continue in full force and effect until notice of revocation thereof is
communicated to Bank at least ten (10) days prior to the effective date of
termination of such authority; be it
RESOLVED FURTHER, that any Director of the Corporation, by his signature,
be, and the same hereby is, authorized and directed to certify to Bank the
adoption of these resolutions; and be it
RESOLVED FURTHER, that the aforementioned Director of the Corporation be,
and is, authorized, directed and empowered to do all other things and acts, to
execute and deliver all other instruments, documents and certificates and to pay
all costs, fees and taxes as may be, in their sole judgment, necessary, proper
or advisable in order to carry out or comply with the purpose or intent of the
foregoing resolutions; and that all of the acts and deeds of the aforementioned
Director of the Corporation which are consistent with the purposes and intent of
such resolutions be, and the same hereby are, in all respect approved, confirmed
and adopted as the acts and deeds of the Corporation.
SUBORDINATION AGREEMENT
The undersigned (the "INVESTOR"), being an owner and holder of certain
obligations of ▇▇▇▇▇▇ Group, Inc. (the "BORROWER"), and payable or otherwise
accruing to the Investor arising in connection with the promissory note attached
hereto as "EXHIBIT A" (the "INVESTOR NOTE", and the obligations arising in
connection with the Investor Note, the "INVESTOR OBLIGATIONS"), does, for the
benefit of, and at the instance of, Comerica Bank-Texas, a Texas banking
association (the "BANK") and as an inducement to the Bank to extend or to
continue to extend financial accommodations to the Borrower from time to time,
undertake the following actions:
1. SUBORDINATION.
a. The Investor does hereby expressly subordinate and make inferior at
all times and in all respects all of its indebtedness, obligations (including
without limitation, the Investor Obligations), liens and claims, whether express
or implied, written or verbal, secured or unsecured, now existing or hereafter
arising, of any amount and of any nature from the Borrower to the Investor
(collectively, the "SUBORDINATED INDEBTEDNESS") to all indebtedness,
obligations, liens and claims, whether express or implied, written or verbal,
now existing or hereafter arising, of any amount and of any nature (and all
renewals, extension and modifications thereof) from the Borrower to the Bank
(collectively, the "SENIOR INDEBTEDNESS").
b. The Investor does hereby agree that the Subordinated Indebtedness
shall be and remain at all times and in all respects secondary and inferior to
the Senior Indebtedness, and all of the Senior Indebtedness, as now or hereafter
renewed or extended, shall remain at all times and in all aspects prior and
superior to the Subordinated Indebtedness. No consent or notice shall at any
time be required in connection with the renewal or extension of any of the
Senior Indebtedness.
2. PAYMENTS ON INVESTOR OBLIGATIONS. Notwithstanding anything to the
contrary, so long as no "Default" or "Event of Default" (as such terms are
defined in the Senior Loan Agreement) shall have occurred and be continuing
under that certain First Amended and Restated Revolving Credit Loan Agreement
dated as of December 4, 1996, among the Borrower and the Bank (as amended or
otherwise modified from time to time, the "SENIOR LOAN AGREEMENT"), the Borrower
may make scheduled payments (but not prepayments) of interest and/or principal
on, and otherwise satisfy, the Investor Obligations in accordance with the terms
of the Investor Note.
3. DEFAULT. Any failure to comply with the terms of, or any default or
event of default declared under the Investor Note shall constitute an "Event of
Default" (as such term is defined therein) under the Senior Loan Agreement. The
Borrower agrees to promptly notify the Bank of any default or event of default
declared under the Investor Note. So long as any "Default" or "Event of Default"
(as such terms are defined therein) shall have occurred and be continuing under
the Senior Loan Agreement, the Investor will not ask for, demand, ▇▇▇ for, take
or receive, or offer to make any discharge or release of, any of the
Subordinated Indebtedness.
4. INVESTOR NOTE. No amendment or modification to the Investor Note shall
be made without the express written approval of the Bank.
5. BANKRUPTCY. The provisions of this Subordination Agreement shall
continue in full force and effect, notwithstanding the commencement of a case
under Title 11 of the United States Code, as amended and/or superseded, by or
against the Borrower or the Investor.
6. MISCELLANEOUS. This Subordination Agreement shall be governed in all
respects by the laws of the State of Texas as such laws are applied to
agreements between Texas residents entered into and to be performed entirely
with Texas. This Subordination Agreement may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original but all of which when taken together shall
constitute one and the same agreement.
[SIGNATURE PAGES FOR THIS SUBORDINATION AGREEMENT FOLLOW]
EXECUTED this 25th day of March, 2001.
INVESTOR:
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
AGREEMENT AND ACKNOWLEDGEMENT:
The Borrower hereby accepts notice of the subordination created by this
Subordination Agreement and agrees that it will take no action inconsistent
with this Subordination Agreement.
BORROWER:
▇▇▇▇▇▇ GROUP, INC
By: /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: VP & CFO
------------------------------------
EXHIBIT A
OBLIGATIONS
[Attach copy of promissory note to Investor]
PROMISSORY NOTE
$92,000 Dallas, Texas March 29, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ Group, Inc., a Delaware corporation
("Maker"), promises to pay to the order of ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Payee"), at Dallas,
Texas, or at such other place as the holder hereof shall designate from time to
time in writing, in lawful money of the United States of America, the principal
sum of Ninety Two Thousand and No/100 Dollars($92,000), and to pay interest from
the date hereof on the principal balance hereof from time to time remaining
unpaid prior to maturity at the prime rate of interest from to time in effect at
Dallas, Texas (which rate shall change from time to time when and as such prime
rate of interest shall change) plus six percent (6%) per annum, such interest
payable semi-annually on October 1 and April 1 of each year. All past due
principal and interest shall bear interest at the higher of such rate or
eighteen percent (18%) per annum until paid. The interest hereon shall never be
charged or collected at a Highest Lawful Rate (as defined herein).
The entire principal of this Note and accrued interest thereon shall be due
in full on April 1, 2004.
Except as otherwise provided in this Note, the undersigned waives demand,
presentment for payment, protest, notice of protest, notice of intention to
accelerate, filing of suit, and diligence in collecting this Note.
If this Note shall be collected by legal proceedings or through a
bankruptcy court, or shall be placed in the hands of an attorney for collection
after maturity, no matter how maturity is brought about, the undersigned agrees
to pay reasonable attorneys' or collection fees incurred by Payee in connection
therewith.
This Note shall be construed in accordance with and governed by the laws of
the State of Texas.
The undersigned shall have the right to prepay the principal in whole or in
part from time to time without premium or penalty.
This Note shall become and be immediately due and payable upon the written
demand of the holder hereof to the Maker if one or more of the following events
shall happen and be continuing at the time of such demand:
(1) a decree or order by a court of competent jurisdiction shall have been
entered, either (i) adjusting the Maker a bankrupt or insolvent, or
(ii) approving a petition seeking reorganization or arrangement of the
Maker under the Title II of the United States Code (the "Bankruptcy
Code") or any other similar applicable federal or state law, or
(iii) appointing a receiver or liquidator or trustee or assignee in
bankruptcy of
insolvency of the Maker or a receiver of all or any substantial
portion of its property, and any such decree or order shall have
continued in force undischarged or unstayed for a period of sixty (60)
days; or
(2) the Maker shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking
reorganization or arrangement under the Bankruptcy Code or any other
similar applicable federal or state law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of all or substantially all of its property, or
shall make a general assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due.
Any notice or demand required to be given hereunder by any holder hereof
shall be deemed to have been given and received (1) when actually received by
Maker, if delivered in person, or (2) forty-eight (48) hours after a letter
containing such notice is deposited in the United States mail, certified or
registered, with postage prepaid, and addressed to Maker at ▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, or at such other address of Maker as Maker
shall advise the holder hereof by certified or registered mail.
This Note and all other agreements between Maker and Payee are hereby
expressly limited so that, in no contingency or event whatsoever, whether
through acceleration of maturity of this Note or otherwise, shall the amount
paid or agreed to be paid to the Payee for the use, forbearance or detention of
the money advanced or to be advanced hereunder exceed the highest lawful rate
permissible under the laws of the State of Texas as applicable to this
transaction. If, from any circumstances whatsoever, fulfillment of any provision
hereof, at the time performance of such provision shall be due, shall involve
the payment of interest in excess of the Highest Lawful Rate, and if from any
circumstances the holder hereof shall ever receive as interest an amount that
would exceed the Highest Lawful Rate, the amount that would be excessive shall
be applied to the reduction of the unpaid principal balance of this Note (and
not to the payment of interest) or if such excessive interest exceeds the unpaid
balance of principal of the Note, the excess shall be refunded to Maker, and the
holder hereof shall not be subject to any penalty provided for the contracting
for, or charging or receiving of, interest in excess of the Highest Lawful Rate
regardless of when or the circumstances under which such refund or application
was made.
In the event that, subsequent to the date hereof, Maker obtains financing
from any third party source, whether in the form of debt or equity, Maker and
Payee agree to amend this Note and enter into such other documentation as is
necessary for Payee to receive consideration for the loan evidenced by this Note
on terms and conditions no less favorable to Payee than those provided to such
third party. By way of illustration but not of limitation, should such third
party source receive equity securities or securities convertible into equity
securities of Maker in connection with a financing, Payee shall receive the same
on the same terms and at the same price.
EXECUTED as of the day and year first above written.
▇▇▇▇▇▇ GROUP, INC.
By:
Name: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: CFO, Vice President of Finance
------------------------------------
SUBORDINATION AGREEMENT
The undersigned (the "INVESTOR"), being an owner and holder of certain
obligations of ▇▇▇▇▇▇ Group, Inc. (the "BORROWER"), and payable or otherwise
accruing to the Investor arising in connection with the promissory note attached
hereto as "EXHIBIT A" (the "INVESTOR NOTE", and the obligations arising in
connection with the Investor Note, the "INVESTOR OBLIGATIONS"), does, for the
benefit of, and at the instance of, Comerica Bank-Texas, a Texas banking
association (the "BANK") and as an inducement to the Bank to extend or to
continue to extend financial accommodations to the Borrower from time to time,
undertake the following actions:
1. SUBORDINATION.
a. The Investor does hereby expressly subordinate and make inferior at
all times and in all respects all of its indebtedness, obligations (including
without limitation, the Investor Obligations), liens and claims, whether express
or implied, written or verbal, secured or unsecured, now existing or hereafter
arising, of any amount and of any nature from the Borrower to the Investor
(collectively, the "SUBORDINATED INDEBTEDNESS") to all indebtedness,
obligations, liens and claims, whether express or implied, written or verbal,
now existing or hereafter arising, of any amount and of any nature (and all
renewals, extension and modifications thereof) from the Borrower to the Bank
(collectively, the "SENIOR INDEBTEDNESS").
b. The Investor does hereby agree that the Subordinated Indebtedness
shall be and remain at all times and in all respects secondary and inferior to
the Senior Indebtedness, and all of the Senior Indebtedness, as now or hereafter
renewed or extended, shall remain at all times and in all aspects prior and
superior to the Subordinated Indebtedness. No consent or notice shall at any
time be required in connection with the renewal or extension of any of the
Senior Indebtedness.
2. PAYMENTS ON INVESTOR OBLIGATIONS. Notwithstanding anything to the
contrary, so long as no "Default" or "Event of Default" (as such terms are
defined in the Senior Loan Agreement) shall have occurred and be continuing
under that certain First Amended and Restated Revolving Credit Loan Agreement
dated as of December 4, 1996, among the Borrower and the Bank (as amended or
otherwise modified from time to time, the "SENIOR LOAN AGREEMENT"), the Borrower
may make scheduled payments (but not prepayments) of interest and/or principal
on, and otherwise satisfy, the Investor Obligations in accordance with the terms
of the Investor Note.
3. DEFAULT. Any failure to comply with the terms of, or any default or
event of default declared under the Investor Note shall constitute an "Event of
Default" (as such term is defined therein) under the Senior Loan Agreement. The
Borrower agrees to promptly notify the Bank of any default or event of default
declared under the Investor Note. So long as any "Default" or "Event of Default"
(as such terms are defined therein) shall have occurred and be continuing under
the Senior Loan Agreement, the Investor will not ask for, demand, ▇▇▇ for, take
or receive, or offer to make any discharge or release of, any of the
Subordinated Indebtedness.
4. INVESTOR NOTE. No amendment or modification to the Investor Note shall
be made without the express written approval of the Bank.
5. BANKRUPTCY. The provisions of this Subordination Agreement shall
continue in full force and effect, notwithstanding the commencement of a case
under Title 11 of the United States Code, as amended and/or superseded, by or
against the Borrower or the Investor.
6. MISCELLANEOUS. This Subordination Agreement shall be governed in all respects
by the laws of the State of Texas as such laws are applied to agreements between
Texas residents entered into and to be performed entirely with Texas. This
Subordination Agreement may be executed in one or more counterparts and on
telecopy counterparts, each of which when so executed shall be deemed to be an
original but all of which when taken together shall constitute one and the same
agreement.
[SIGNATURE PAGES FOR THIS SUBORDINATION AGREEMENT FOLLOW]
EXECUTED this 31st day of March, 2001.
[Name of Investor]
By: /s/ ▇▇▇▇ ▇. Chain, JR.
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Name: ▇▇▇▇ ▇. CHAIN, JR.
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Title:
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AGREEMENT AND ACKNOWLEDGMENT:
The Borrower hereby accepts notice of the subordination created by this
Subordination Agreement and agrees that it will take no action inconsistent with
this Subordination Agreement.
BORROWER:
▇▇▇▇▇▇ GROUP, INC.
By:
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Name:
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Title:
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EXECUTED this ___ day of March, 2001.
INVESTOR:
▇▇▇▇ ▇. CHAIN, JR.
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AGREEMENT AND ACKNOWLEDGMENT:
The Borrower hereby accepts notice of the subordination created by this
Subordination Agreement and agrees that it will take no action inconsistent with
this Subordination Agreement.
BORROWER:
▇▇▇▇▇▇ GROUP, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇
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Title: VP & CFO
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EXHIBIT A
OBLIGATIONS
[Attach copy of promissory note to Investor]
PROMISSORY NOTE
$1,000,000 Dallas, Texas March 29, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ Group, Inc., a Delaware corporation
("Maker"), promises to pay to the order of ▇▇▇▇ ▇. Chain, Jr. ("Payee"), at
Dallas, Texas, or at such other place as the holder hereof shall designate from
time to time in writing, in lawful money of the United States of America, the
principal sum of One Million and No/100 Dollars ($1,000,000), and to pay
interest from April 1, 2002 on the principal balance hereof from time to time
remaining unpaid prior to maturity at the prime rate of interest from time to
time in effect at Dallas, Texas (which rate shall change from time to time when
and as such prime rate of interest shall change) plus six percent (6%) per
annum, such interest payable semi-annually on October 1 and April 1 of each
year. All past due principal and interest shall bear interest at the higher of
such rate or eighteen percent (18%) per annum until paid. The interest hereon
shall never be charged or collected at a Highest Lawful Rate (as defined
herein).
The entire principal of this Note and accrued interest thereon shall be due
in full on April 1, 2004.
Except as otherwise provided in this Note, the undersigned waives demand,
presentment for payment, protest, notice of protest, notice of intention to
accelerate, filing of suit, and diligence in collecting this Note.
If this Note shall be collected by legal proceedings or through a
bankruptcy court, or shall be placed in the hands of an attorney for collection
after maturity, no matter how maturity is brought about, the undersigned agrees
to pay reasonable attorneys' or collection fees incurred by Payee in connection
therewith.
This Note shall be construed in accordance with and governed by the laws of
the State of Texas.
The undersigned shall have the right to prepay the principal in whole or in
part from time to time without premium or penalty.
This Note shall become and be immediately due and payable upon the written
demand of the holder hereof to the Maker if one or more of the following events
shall happen and be continuing at the time of such demand:
(1) a decree or order by a court of competent jurisdiction shall have been
entered, either (i) adjudging the Maker a bankrupt or insolvent, or
(ii) approving a petition seeking reorganization or arrangement of the
Maker under the Title II of the United States Code (the "Bankruptcy
Code") or any other similar applicable federal or state law, or (iii)
appointing a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Maker or a receiver of all or any
substantial portion of its property,
and any such decree or order shall have continued in force
undischarged or unstayed for a period of sixty (60) days; or
(2) the Maker shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking
reorganization or arrangement under the Bankruptcy Code or any other
similar applicable federal or state law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of all or substantially all of its property, or
shall make a general assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due.
Any notice or demand required to be given hereunder by any holder hereof
shall be deemed to have been given and received (1) when actually received by
Maker, if delivered in person, or (2) forty-eight (48) hours after a letter
containing such notice is deposited in the United States mail, certified or
registered, with postage prepaid, and addressed to Maker at ▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, or at such other address of Maker as Maker
shall advise the holder hereof by certified or registered mail.
This Note and all other agreements between Maker and Payee are hereby
expressly limited so that, in no contingency or event whatsoever, whether
through acceleration of maturity of this Note or otherwise, shall the amount
paid or agreed to be paid to the Payee for the use, forbearance or detention of
the money advanced or to be advanced hereunder exceed the highest lawful rate
permissible under the laws of the State of Texas as applicable to this
transaction. If, from any circumstances whatsoever, fulfillment of any provision
hereof, at the time performance of such provision shall be due, shall involve
the payment of interest in excess of the Highest Lawful Rate, and if from any
circumstances the holder hereof shall ever receive as interest an amount that
would exceed the Highest Lawful Rate, the amount that would be excessive shall
be applied to the reduction of the unpaid principal balance of this Note (and
not to the payment of interest) or if such excessive interest exceeds the unpaid
balance of principal of the Note, the excess shall be refunded to Maker, and the
holder hereof shall not be subject to any penalty provided for the contracting
for, or charging or receiving of, interest in excess of the Highest Lawful Rate
regardless of when or the circumstances under which such refund or application
was made.
In the event that, subsequent to the date hereof, Maker obtains financing
from any third party source, whether in the form of debt or equity, Maker and
Payee agree to amend this Note and enter into such other documentation as is
necessary for Payee to receive consideration for the loan evidenced by this Note
on terms and conditions no less favorable to Payee than those provided to such
third party. By way of illustration but not of limitation, should such third
party source receive equity securities or securities convertible into equity
securities of Maker in connection with a financing, Payee shall receive the same
on the same terms and at the same price.
EXECUTED as of the day and year first above written.
▇▇▇▇▇▇ GROUP, INC.
By:
Name: /s/ ▇▇▇ ▇▇▇▇▇▇
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Title: CFO, Vice President of Finance
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