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EXHIBIT 10.26
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made as of March 5, 2001, by
EARTHCARE ACQUISITION SUB, INC., an Illinois corporation (hereinafter called
"Debtor," whether one or more), whose address is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ in favor of the persons identified on Exhibit 1 attached
hereto ("Secured Party"), whose address is ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇. Debtor hereby agrees with Secured Party as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) The term "Borrower" shall mean Debtor and I.W.S.
Portables, Inc., a Florida corporation.
(b) The term "Code" shall mean the Texas Business and Commerce
Code as in effect in the State of Texas on the date of this Agreement
or as it may hereafter be amended from time to time.
(c) The term "Collateral" shall mean all of the property set
forth below (as indicated):
(X) All present and future accounts, chattel paper, documents, and
instruments (including any right to payment of a monetary
obligation, whether or nor earned by performance: for any
property that is sold, leased, licensed, assigned or otherwise
disposed of; for services rendered or to be rendered; for a
secondary obligation incurred or to be incurred; and for
insurance company receivables ), now or hereafter owned, held,
or acquired by Debtor, together with any and all books of
account, customer lists and other records relating in any way
to the foregoing (including, without limitation, computer
software, whether on tape, disk, card, strip, cartridge or any
other form), and in any case where an account arises from the
sale of property, the interest of Debtor in such property.
(X) All present and hereafter acquired inventory (including
without limitation, all goods that are leased by a person as
lessor, are held by a person for sale or lease or to be
furnished under a contract of service, are furnished by a
person under a contract of service, or consist of raw
materials, work in process, or materials used or consumed in a
business) held, possessed, owned, held on consignment, or held
for sale, lease, return or to be furnished under contracts of
services, in whole or in part, by Debtor wherever located, and
all records relating in any way to the foregoing (including,
without limitation, any computer software, whether on tape,
disk, card, strip, cartridge or any other form).
(X) All equipment (including without limitation, all goods other
than inventory) and fixtures of whatsoever kind and character
now or hereafter possessed, held, acquired,
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leased, or owned by Debtor and used or usable in Debtor's
business, together with all replacements, accessories,
additions, substitutions and accessions to all of the
foregoing, and all records relating in any way to the
foregoing (including, without limitation, any computer
software, whether on tape, disk, card, strip, cartridge or any
other form). To the extent that the foregoing property is
located on, attached to, annexed to, related to, or used in
connection with, or otherwise made a part of, and is or shall
become fixtures upon, real property, such real property and
the record owner thereof is described on Exhibit A attached
hereto and made a part hereof.
(X) All now existing or hereafter acquired general intangibles of
every kind and nature, all payment intangibles, permits,
regulatory approvals, copyrights, patents, trademarks, service
marks, trade names, mask works, goodwill, licenses and all
other intellectual property owned by Debtor or used in
Debtor's business.
(X) All investment property of every kind and nature, including
all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity
accounts, or commodity contracts, now or hereafter owned,
held, or acquired by Debtor.
(X)` All deposit accounts now or hereafter owned, held, or acquired
by Debtor.
The term Collateral, as used herein, shall also include all
products and proceeds of all of the foregoing (including without
limitation, insurance payable by reason of loss or damage to the
foregoing property) and any property, securities, guaranties or monies
of Debtor which may at any time come into the possession of Secured
Party. The designation of proceeds does not authorize Debtor to sell,
transfer or otherwise convey any of the foregoing property except
finished goods intended for sale in the ordinary course of Debtor's
business or as otherwise provided herein.
(d) The term "Indebtedness" shall mean (i) all indebtedness,
obligations and liabilities of Borrower to Secured Party of any kind or
character, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their
acquisition by Secured Party, be or have been payable to or in favor of
a third party and subsequently acquired by Secured Party (it being
contemplated that Secured Party may make such acquisitions from third
parties), including without limitation all indebtedness, obligations
and liabilities of Borrower to Secured Party now existing or hereafter
arising by note, draft, acceptance, guaranty, endorsement, letter of
credit, assignment, purchase, overdraft, discount, indemnity agreement
or otherwise, including, without limitation the promissory note dated
March __, 201, in the aggregate original principal amount of $2,500,000
executed by Borrower and payable to the order of Secured Party, (ii)
all accrued but unpaid interest on any of the indebtedness described in
(i) above, (iii) all obligations of Borrower to Secured Party under any
documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii) above, (iv) all
costs and expenses incurred by Secured Party in connection with the
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collection and administration of all or any part of the indebtedness
and obligations described in (i), (ii) and (iii) above or the
protection or preservation of, or realization upon, the collateral
securing all or any part of such indebtedness and obligations,
including without limitation all reasonable attorneys' fees, and (v)
all renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii) and (iv)
above.
(e) The term "Loan Documents" shall mean all instruments and
documents evidencing, securing, governing, guaranteeing and/or
pertaining to the Indebtedness.
(f) The term "Obligated Party" shall mean any party other than
Borrower, including, without limitation, Debtor, who secures,
guarantees and/or is otherwise obligated to pay all or any portion of
the Indebtedness.
All words and phrases used herein which are expressly defined in Section 1.201
or Chapter 9 of the Code shall have the meaning provided for therein. Other
words and phrases defined elsewhere in the Code shall have the meaning specified
therein except to the extent such meaning is inconsistent with a definition in
Section 1.201 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Debtor, for
value received, hereby pledges and grants to Secured Party a continuing security
interest in the Collateral.
3. Representations and Warranties. In addition to any representations
and warranties of Debtor set forth in the Loan Documents, which are incorporated
herein by this reference, Debtor hereby represents and warrants the following to
Secured Party:
(a) Authority. The execution, delivery and performance of this
Agreement and all of the other Loan Documents by Debtor have been duly
authorized by all necessary corporate action of Debtor, to the extent
Debtor is a corporation, by all necessary partnership action, to the
extent Debtor is a partnership, or by all necessary limited liability
company action, to the extent Debtor is a limited liability company.
(b) Accuracy of Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Debtor
with respect to the Collateral is true and correct.
(c) Enforceability. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of Debtor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
(d) Ownership and Liens. Debtor has good and marketable title
to the Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement. No dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Collateral.
Debtor has not executed any
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other security agreement currently affecting the Collateral and no
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording
office except as may have been executed or filed in favor of Secured
Party.
(e) No Conflicts or Consents. Neither the ownership, the
intended use of the Collateral by Debtor, the grant of the security
interest by Debtor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i) conflict with any
provision of (A) any domestic or foreign law, statute, rule or
regulation, (B) the articles or certificate of incorporation, charter,
bylaws, partnership agreement, articles or certificate of organization,
or regulations as the case may be, of Debtor, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon
Debtor, or (ii) result in or require the creation of any lien, charge
or encumbrance upon any assets or properties of Debtor or of any person
except as may be expressly contemplated in the Loan Documents. Except
as expressly contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with
the grant by Debtor of the security interest herein or the exercise by
Secured Party of its rights and remedies hereunder.
(f) Security Interest. Debtor has and will have at all times
full right, power and authority to grant a security interest in the
Collateral to Secured Party in the manner provided herein, free and
clear of any lien, security interest or other charge or encumbrance.
This Agreement creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral securing the Indebtedness.
Possession by Secured Party of all certificates, instruments and cash
constituting Collateral from time to time and/or the filing of the
financing statements delivered prior hereto and/or concurrently
herewith by Debtor to Secured Party will perfect and establish the
first priority of Secured Party's security interest hereunder in the
Collateral.
(g) Location. Debtor's residence or chief executive office, as
the case may be, and the office where the records concerning the
Collateral are kept is located at its address set forth on the first
page hereof or the addresses specified on Schedule 1 to this Agreement.
Except as specified elsewhere herein, all Collateral shall be kept at
such address.
(h) Solvency of Debtor. As of the date hereof, and after
giving effect to this Agreement and the completion of all other
transactions contemplated by Debtor at the time of the execution of
this Agreement, (i) Debtor is and will be solvent, (ii) the fair
saleable value of Debtor's assets exceeds and will continue to exceed
Debtor's liabilities (both fixed and contingent), (iii) Debtor is
paying and will continue to be able to pay its debts as they mature,
and (iv) if Debtor is not an individual, Debtor has and will have
sufficient capital to carry on Debtor's businesses and all businesses
in which Debtor is about to engage.
(i) Compliance with Environmental Laws. Except as disclosed in
writing to Secured Party: (i) Debtor is conducting Debtor's businesses
in material compliance with all applicable federal, state and local
laws, statutes, ordinances, rules, regulations, orders,
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determinations and court decisions, including without limitation, those
pertaining to health or environmental matters such as the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
(collectively, together with any subsequent amendments, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous Substance Waste
Amendments of 1984 (collectively, together with any subsequent
amendments, hereinafter called "RCRA"), the Texas Water Code and the
Texas Solid Waste Disposal Act; (ii) none of the operations of Debtor
is the subject of a federal, state or local investigation evaluating
whether any material remedial action is needed to respond to a release
or disposal of any toxic or hazardous substance or solid waste into the
environment; (iii) Debtor has not filed any notice under any federal,
state or local law indicating that Debtor is responsible for the
release into the environment, the disposal on any premises in which
Debtor is conducting its businesses or the improper storage, of any
material amount of any toxic or hazardous substance or solid waste or
that any such toxic or hazardous substance or solid waste has been
released, disposed of or is improperly stored, upon any premise on
which Debtor is conducting its businesses; and (iv) Debtor otherwise
does not have any known material contingent liability in connection
with the release into the environment, disposal or the improper
storage, of any such toxic or hazardous substance or solid waste. The
terms "hazardous substance" and "release," as used herein, shall have
the meanings specified in CERCLA, and the terms "solid waste" and
"disposal," as used herein, shall have the meanings specified in RCRA;
provided, however, that to the extent that the laws of the State of
Texas establish meanings for such terms which are broader than that
specified in either CERCLA or RCRA, such broader meanings shall apply.
(j) Inventory. The security interest in the inventory shall
continue through all stages of manufacture and shall, without further
action, attach to the accounts or other proceeds resulting from the
sale or other disposition thereof and to all such inventory as may be
returned to Debtor by its account debtors.
(k) Accounts. Each account represents the valid and legally
binding indebtedness of a bona fide account debtor arising from the
sale or lease by Debtor of goods or the rendition by Debtor of services
and is not subject to contra accounts, setoffs, defenses or
counterclaims by or available to account debtors obligated on the
accounts except as disclosed by Debtor to Secured Party from time to
time in writing. The amount shown as to each account on Debtor's books
is the true and undisputed amount owing and unpaid thereon, subject
only to discounts, allowances, rebates, credits and adjustments to
which the account debtor has a right and which have been disclosed to
Secured Party in writing.
(l) Chattel Paper, Documents and Instruments. The chattel
paper, documents and instruments of Debtor pledged hereunder have only
one original counterpart and no party other than Debtor or Secured
Party is in actual or constructive possession of any such chattel
paper, documents or instruments.
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4. Affirmative Covenants. In addition to all covenants and agreements
of Debtor set forth in the Loan Documents, which are incorporated herein by this
reference, Debtor will comply with the covenants contained in this Section 4 at
all times during the period of time this Agreement is effective unless Secured
Party shall otherwise consent in writing.
(a) Ownership and Liens. Debtor will maintain good and
marketable title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement and the security interests
and other encumbrances expressly permitted herein or by the other Loan
Documents. Debtor will not permit any dispute, right of setoff,
counterclaim or defense to exist with respect to all or any part of the
Collateral. Debtor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as
may exist or as may have been filed in favor of Secured Party. Debtor
will defend at its expense Secured Party's right, title and security
interest in and to the Collateral against the claims of any third
party.
(b) Further Assurances. Debtor will from time to time at its
expense promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or that
Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the
first priority of such security interest, (ii) to enable Secured Party
to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (A) executing and filing such
financing or continuation statements, or amendments thereto; and (B)
furnishing to Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral, all in reasonable detail
satisfactory to Secured Party.
(c) Inspection of Collateral. Debtor will keep adequate
records concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect any of
the Collateral and the books and records of or relating to the
Collateral at any time during normal business hours, to make and take
away photocopies, photographs and printouts thereof and to write down
and record any such information.
(d) Payment of Taxes. Debtor (i) will timely pay all property
and other taxes, assessments and governmental charges or levies imposed
upon the Collateral or any part thereof, (ii) will timely pay all
lawful claims which, if unpaid, might become a lien or charge upon the
Collateral or any part thereof, and (iii) will maintain appropriate
accruals and reserves for all such liabilities in a timely fashion in
accordance with generally accepted accounting principles. Debtor may,
however, delay paying or discharging any such taxes, assessments,
charges, claims or liabilities so long as the validity thereof is
contested in good faith by proper proceedings and provided Debtor has
set aside on Debtor's books adequate reserves therefor; provided,
however, Debtor understands and agrees that in the event of any such
delay in payment or discharge and upon Secured Party's written request,
Debtor will establish with Secured Party an escrow acceptable to
Secured Party adequate to cover the payment of such taxes, assessments
and governmental charges with interest, costs and
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penalties and a reasonable additional sum to cover possible costs,
interest and penalties (which escrow shall be returned to Debtor upon
payment of such taxes, assessments, governmental charges, interests,
costs and penalties or disbursed in accordance with the resolution of
the contest to the claimant) or furnish Secured Party with an indemnity
bond secured by a deposit in cash or other security acceptable to
Secured Party. Notwithstanding any other provision contained in this
Subsection, Secured Party may at its discretion exercise its rights
under Subsection 6(c) at any time to pay such taxes, assessments,
governmental charges, interest, costs and penalties.
(e) Mortgagee's and Landlord's Waivers. Debtor shall cause
each mortgagee of real property owned by Debtor and each landlord of
real property leased by Debtor to execute and deliver agreements
satisfactory in form and substance to Secured Party by which such
mortgagee or landlord waives or subordinates any rights it may have in
the Collateral.
(f) Condition of Goods. Debtor will maintain, preserve,
protect and keep all Collateral which constitutes goods in good
condition, repair and working order and will cause such Collateral to
be used and operated in good and workmanlike manner, in accordance with
applicable laws and in a manner which will not make void or cancelable
any insurance with respect to such Collateral. Debtor will promptly
make or cause to be made all repairs, replacements and other
improvements to or in connection with the Collateral, which Secured
Party may request from time to time.
(g) Insurance. Debtor will, at its own expense, maintain
insurance with respect to all Collateral which constitutes goods in
such amounts, against such risks, in such form and with such insurers,
as shall be satisfactory to Secured Party from time to time. If
requested by Secured Party, each policy for property damage insurance
shall provide for all losses to be paid directly to Secured Party. If
requested by Secured Party, each policy of insurance maintained by
Debtor shall (i) name Debtor and Secured Party as insured parties
thereunder (without any representation or warranty by or obligation
upon Secured Party) as their interests may appear, (ii) contain the
agreement by the insurer that any loss thereunder shall be payable to
Secured Party notwithstanding any action, inaction or breach of
representation or warranty by Debtor, (iii) provide that there shall be
no recourse against Secured Party for payment of premiums or other
amounts with respect thereto, and (iv) provide that at least thirty
(30) days prior written notice of cancellation or of lapse shall be
given to Secured Party by the insurer. Debtor will, if requested by
Secured Party, deliver to Secured Party original or duplicate policies
of such insurance and, as often as Secured Party may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Debtor will also, at the request of Secured Party, duly
execute and deliver instruments of assignment of such insurance
policies and cause the respective insurers to acknowledge notice of
such assignment. All insurance payments in respect of loss of or damage
to any Collateral shall be paid to Secured Party and applied as Secured
Party in its sole discretion deems appropriate.
(h) Accounts and General Intangibles. Debtor will, except as
otherwise provided in Subsection 6(e), collect, at Debtor's own
expense, all amounts due or to become due under each of the accounts
and general intangibles. In connection with such collections, Debtor
may
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and, at Secured Party's direction, will take such action not otherwise
forbidden by Subsection 5(e) as Debtor or Secured Party may deem
necessary or advisable to enforce collection or performance of each of
the accounts and general intangibles. Debtor will also duly perform and
cause to be performed all of its obligations with respect to the goods
or services, the sale or lease or rendition of which gave rise or will
give rise to each account and all of its obligations to be performed
under or with respect to the general intangibles. Debtor also covenants
and agrees to take any action and/or execute any documents that Secured
Party may request in order to comply with the Federal Assignment of
Claims Act, as amended.
(i) Chattel Paper, Documents and Instruments. Debtor will take
such action as may be requested by Secured Party in order to cause any
chattel paper, documents or instruments to be valid and enforceable and
will cause all chattel paper to have only one original counterpart.
Upon request by Secured Party, Debtor will deliver to Secured Party all
originals of chattel paper, documents or instruments and will ▇▇▇▇ all
chattel paper with a legend indicating that such chattel paper is
subject to the security interest granted hereunder.
5. Negative Covenants. Debtor will comply with the covenants contained
in this Section 5 at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Debtor will not (i) sell, assign
(by operation of law or otherwise), transfer, exchange, lease or
otherwise dispose of any of the Collateral, (ii) ▇▇▇▇▇ ▇ ▇▇▇▇ or
security interest in or execute, file or record any financing statement
or other security instrument with respect to the Collateral to any
party other than Secured Party, or (iii) deliver actual or constructive
possession of any of the Collateral to any party other than Secured
Party, except for (A) sales and leases of inventory in the ordinary
course of business, and (B) the sale or other disposal of any item of
equipment which is worn out or obsolete and which has been replaced by
an item of equal suitability and value, owned by Debtor and made
subject to the security interest under this Agreement, but which is
otherwise free and clear of any lien, security interest, encumbrance or
adverse claim; provided, however, the exceptions permitted in clauses
(A) and (B) above shall automatically terminate upon the occurrence of
an Event of Default.
(b) Impairment of Security Interest. Debtor will not take or
fail to take any action, which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Possession of Collateral. Debtor will not cause or permit
the removal of any Collateral from its possession, control and risk of
loss, nor will Debtor cause or permit the removal of any Collateral
from the address on the first page hereof and the addresses specified
on Schedule 1 to this Agreement other than (i) as permitted by
Subsection 5(a), or (ii) in connection with the possession of any
Collateral by Secured Party or by its bailee.
(d) Goods. Debtor will not permit any Collateral which
constitutes goods to at any time (i) be covered by any document except
documents in the possession of the Secured
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Party, (ii) become so related to, attached to or used in connection
with any particular real property so as to become a fixture upon such
real property, or (iii) be installed in or affixed to other goods so as
to become an accession to such other goods unless such other goods are
subject to a perfected first priority security interest under this
Agreement.
(e) Compromise of Collateral. Debtor will not adjust, settle,
compromise, amend or modify any Collateral, except an adjustment,
settlement, compromise, amendment or modification in good faith and in
the ordinary course of business; provided, however, this exception
shall automatically terminate upon the occurrence of an Event of
Default or upon Secured Party's written request. Debtor shall provide
to Secured Party such information concerning (i) any adjustment,
settlement, compromise, amendment or modification of any Collateral,
and (ii) any claim asserted by any account debtor for credit,
allowance, adjustment, dispute, setoff or counterclaim, as Secured
Party may request from time to time.
(f) Financing Statement Filings. Debtor recognizes that
financing statements pertaining to the Collateral have been or may be
filed where Debtor maintains any Collateral, has its records concerning
any Collateral or has its residence or chief executive office, as the
case may be. Without limitation of any other covenant herein, Debtor
will not cause or permit any change in the location of (i) any
Collateral, (ii) any records concerning any Collateral, or (iii)
Debtor's residence or chief executive office, as the case may be, to a
jurisdiction other than as represented in Subsection 3(g) unless Debtor
shall have notified Secured Party in writing of such change at least
thirty (30) days prior to the effective date of such change, and shall
have first taken all action required by Secured Party for the purpose
of further perfecting or protecting the security interest in favor of
Secured Party in the Collateral. In any written notice furnished
pursuant to this Subsection, Debtor will expressly state that the
notice is required by this Agreement and contains facts that may
require additional filings of financing statements or other notices for
the purpose of continuing perfection of Secured Party's security
interest in the Collateral.
6. Rights of Secured Party. Secured Party shall have the rights
contained in this Section 6 at all times during the period of time this
Agreement is effective.
(a) Additional Financing Statements Filings. Debtor hereby
authorizes Secured Party to file, without the signature of Debtor, one
or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Debtor further agrees that a carbon,
photographic or other reproduction of this Security Agreement or any
financing statement describing any Collateral is sufficient as a
financing statement and may be filed in any jurisdiction Secured Party
may deem appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, such power of attorney
being coupled with an interest, with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, before or after
the occurrence of an Event of Default, to take any action and to
execute any instrument which Secured Party may deem necessary or
appropriate to accomplish the purposes of this Agreement, including
without limitation: (i) to execute and file financing or continuation
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statements, or amendments thereto in the name of Debtor, (ii) to
execute an authenticated record in the name of Debtor with respect to
any deposit account of Debtor, (iii) to execute and delivery directions
or instructions in the name of Debtor to any issuer or securities
intermediary directing or instructing such issuer or securities
intermediary to comply with entitlement orders originated by Secured
Party without further consent of Debtor, (iv) to obtain and adjust
insurance required by Secured Party hereunder; (v) to demand, collect,
▇▇▇ for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of the Collateral;
(vi) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (iv) or (v)
above; and (vii) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or appropriate for
the collection and/or preservation of the Collateral or otherwise to
enforce the rights of Secured Party with respect to the Collateral.
(c) Performance by Secured Party. If Debtor fails to perform
any agreement or obligation provided herein, Secured Party may itself
perform, or cause performance of, such agreement or obligation, and the
expenses of Secured Party incurred in connection therewith shall be a
part of the Indebtedness, secured by the Collateral and payable by
Debtor on demand.
(d) Debtor's Receipt of Proceeds. All amounts and proceeds
(including instruments and writings) received by Debtor in respect of
such accounts or general intangibles shall be received in trust for the
benefit of Secured Party hereunder and, upon request of Secured Party,
shall be segregated from other property of Debtor and shall be
forthwith delivered to Secured Party in the same form as so received
(with any necessary endorsement) and applied to the Indebtedness in
such manner as Secured Party deems appropriate in its sole discretion.
(e) Notification of Account Debtors. Secured Party may at its
discretion from time to time notify any or all obligors under any
accounts or general intangibles (i) of Secured Party's security
interest in such accounts or general intangibles and direct such
obligors to make payment of all amounts due or to become due to Debtor
thereunder directly to Secured Party, and (ii) to verify the accounts
or general intangibles with such obligors. Secured Party shall have the
right, at the expense of Debtor, to enforce collection of any such
accounts or general intangibles and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as
Debtor.
7. Events of Default. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) Default in Payment. The failure, refusal or neglect of
Borrower to make any payment of principal or interest on the
Indebtedness, or any portion thereof, as the same shall become due and
payable; or
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(b) Non-Performance of Covenants. The failure of Borrower or
any Obligated Party to timely and properly observe, keep or perform any
covenant, agreement, warranty or condition required herein or in any of
the other Loan Documents; or
(c) Default Under other Loan Documents. The occurrence of an
event of default under any of the other Loan Documents; or
(d) False Representation. Any representation contained herein
or in any of the other Loan Documents made by Borrower or any Obligated
Party is false or misleading in any material respect; or
(e) Default to Third Party. The occurrence of any event which
permits the acceleration of the maturity of any indebtedness owing by
Borrower or any Obligated Party to any third party under any agreement
or undertaking; or
(f) Debtor's Bankruptcy or Insolvency. If Borrower or any
Obligated Party: (i) becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts as they become due;
(ii) generally is not paying its debts as such debts become due; (iii)
has a receiver, trustee or custodian appointed for, or take possession
of, all or substantially all of the assets of such party or any of the
Collateral, either in a proceeding brought by such party or in a
proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days
after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws (all of
the foregoing hereinafter collectively called "Applicable Bankruptcy
Law") or an involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within sixty (60) days after the filing thereof, or an
order for relief naming such party is entered under any Applicable
Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged
within a period of sixty (60) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to
pay within thirty (30) days any final money judgment against such
party.
(g) Execution on Collateral. The Collateral or any portion
thereof is taken on execution or other process of law in any action
against Debtor; or
(h) Abandonment. Debtor abandons the Collateral or any portion
thereof; or
(i) Action by Other Lienholder. The holder of any lien or
security interest on any of the assets of Debtor, including without
limitation, the Collateral (without hereby implying the consent of
Secured Party to the existence or creation of any such lien or security
interest on the Collateral), declares a default thereunder or
institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
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(j) Liquidation, Death and Related Events. If Borrower or any
Obligated Party is an entity, the liquidation, dissolution, merger or
consolidation of any such entity or, if Borrower or any Obligated Party
is an individual, the death or legal incapacity of any such individual.
8. Remedies and Related Rights. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the other Loan Documents or otherwise available to Secured Party,
Secured Party may exercise one or more of the rights and remedies provided in
this Section.
(a) Remedies. Secured Party may from time to time at its
discretion, without limitation and without notice except as expressly
provided in any of the Loan Documents:
(i) exercise in respect of the Collateral all the
rights and remedies of a secured party under the Code (whether
or not the Code applies to the affected Collateral);
(ii) require Debtor to, and Debtor hereby agrees that
it will at its expense and upon request of Secured Party,
assemble the Collateral as directed by Secured Party and make
it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties;
(iii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security interest
granted hereunder by any available judicial procedure;
(iv) sell or otherwise dispose of, at its office, on
the premises of Debtor or elsewhere, the Collateral, as a unit
or in parcels, by public or private proceedings, and by way of
one or more contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales or other dispositions
may be made from time to time until all of the Collateral has
been sold or disposed of or until the Indebtedness has been
paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the
Collateral;
(v) buy the Collateral, or any portion thereof, at
any public sale;
(vi) buy the Collateral, or any portion thereof, at
any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vii) apply for the appointment of a receiver for the
Collateral, and Debtor hereby consents to any such
appointment; and
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(viii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the circumstances
are such that Secured Party is entitled to do so under the
Code or otherwise.
Debtor agrees that in the event Debtor is entitled to receive any
notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any
Collateral, reasonable notice shall be deemed given when such notice is
deposited in a depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Debtor's address set
forth on the first page hereof, five (5) days prior to the date of any
public sale, or after which a private sale, of any of such Collateral
is to be held. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) Application of Proceeds. If any Event of Default shall
have occurred, Secured Party may at its discretion apply or use any
cash held by Secured Party as Collateral, and any cash proceeds
received by Secured Party in respect of any sale or other disposition
of, collection from, or other realization upon, all or any part of the
Collateral as follows in such order and manner as Secured Party may
elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Secured
Party in connection with (A) the administration of the Loan
Documents, (B) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon,
the Collateral, and (C) the exercise or enforcement of any of
the rights and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by
applicable law (including without limitation, Section
9.504(a)(3) of the Code or any other applicable statutory
provision); and
(vi) by delivery to Debtor or any other party
lawfully entitled to receive such cash or proceeds whether by
direction of a court of competent jurisdiction or otherwise.
(c) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the
Collateral by Secured Party are insufficient to pay
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all amounts to which Secured Party is legally entitled, Borrower and
any party who guaranteed or is otherwise obligated to pay all or any
portion of the Indebtedness shall be liable for the deficiency,
together with interest thereon as provided in the Loan Documents.
(d) Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or
judicial hearing, Debtor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Debtor recognizes and
concedes that non-judicial remedies are consistent with the usage of
trade, are responsive to commercial necessity and are the result of a
bargain at arm's length. Nothing herein is intended to prevent Secured
Party or Debtor from resorting to judicial process at either party's
option.
(e) Other Recourse. Debtor waives any right to require Secured
Party to proceed against any third party, exhaust any Collateral or
other security for the Indebtedness, or to have any third party joined
with Debtor in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to Secured Party.
Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Debtor further waives any defense
arising by reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Debtor shall have no right of subrogation and Debtor
waives the right to enforce any remedy which Secured Party has or may
hereafter have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever now or
hereafter held by Secured Party. Debtor authorizes Secured Party, and
without notice or demand and without any reservation of rights against
Debtor and without affecting Debtor's liability hereunder or on the
Indebtedness to (i) take or hold any other property of any type from
any third party as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other property, (ii)
apply such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive,
enforce or modify any of the provisions of any of the Loan Documents
executed by any third party, and (v) release or substitute any third
party.
9. Indemnity. Debtor hereby indemnifies and agrees to hold harmless
Secured Party, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by, or asserted
against, any Indemnified Person arising in connection with the Loan Documents,
the Indebtedness or the Collateral (including without limitation, the
enforcement of the Loan Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Loan Documents). The
indemnification provided for in this Section shall survive the termination of
this Agreement and shall extend and continue to benefit each individual or
entity who is or has at any time been an Indemnified Person hereunder.
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10. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
agreement of Secured Party and Debtor with respect to the Collateral.
If the parties hereto are parties to any prior agreement, either
written or oral, relating to the Collateral, the terms of this
Agreement shall amend and supersede the terms of such prior agreements
as to transactions on or after the effective date of this Agreement,
but all security agreements, financing statements, guaranties, other
contracts and notices for the benefit of Secured Party shall continue
in full force and effect to secure the Indebtedness unless Secured
Party specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents shall be
valid or effective unless the same is in writing and signed by the
party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and
other security rights of Secured Party hereunder shall not be impaired
by (i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking of
additional security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Debtor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event
of Default without waiving any other prior or subsequent Event of
Default. Secured Party may remedy any default without waiving the Event
of Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Debtor therefrom shall
be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Debtor in any case shall
of itself entitle Debtor to any other or further notice or demand in
similar or other circumstances.
(e) Costs and Expenses. Debtor will upon demand pay to Secured
Party the amount of any and all costs and expenses (including without
limitation, attorneys' fees and expenses), which Secured Party may
incur in connection with (i) the transactions which give rise to the
Loan Documents, (ii) the preparation of this Agreement and the
perfection and preservation of the security interests granted under the
Loan Documents, (iii) the administration of the Loan Documents, (iv)
the custody, preservation, use or operation of,
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or the sale of, collection from, or other realization upon, the
Collateral, (v) the exercise or enforcement of any of the rights of
Secured Party under the Loan Documents, or (vi) the failure by Debtor
to perform or observe any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT
OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue. This Agreement has been entered into in the county
in Texas where Secured Party's address for notice purposes is located,
and it shall be performable for all purposes in such county. Courts
within the State of Texas shall have jurisdiction over any and all
disputes arising under or pertaining to this Agreement and venue for
any such disputes shall be in the county or judicial district where
this Agreement has been executed and delivered.
(h) Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be illegal, invalid or
unenforceable under present or future laws, such provision shall be
fully severable, shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision
held to be illegal, invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be construed
as an obligation on the part of Secured Party to extend or continue to
extend credit to Borrower.
(j) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to this
Agreement shall be in writing and given by (i) personal delivery, (ii)
expedited delivery service with proof of delivery, or (iii) United
States mail, postage prepaid, registered or certified mail, return
receipt requested, sent to the intended addressee at the address set
forth on the first page hereof or to such different address as the
addressee shall have designated by written notice sent pursuant to the
terms hereof and shall be deemed to have been received either, in the
case of personal delivery, at the time of personal delivery, in the
case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under the care
and custody of the United States Postal Service. Either party shall
have the right to change its address for notice hereunder to any other
location within the continental United States by notice to the other
party of such new address at least thirty (30) days prior to the
effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates
a continuing security interest in the Collateral, (ii) shall be binding
on Debtor and the heirs, executors, administrators, personal
representatives, successors and assigns of Debtor, and (iii) shall
inure
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to the benefit of Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge,
assign or otherwise transfer the Indebtedness and its rights under this
Agreement and any of the other Loan Documents to any other party.
Debtor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured
Party.
(l) Cumulative Rights. All rights and remedies of Secured
Party hereunder are cumulative of each other and of every other right
or remedy which Secured Party may otherwise have at law or in equity or
under any of the other Loan Documents, and the exercise of one or more
of such rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of any other rights or remedies.
(m) Gender and Number. Within this Agreement, words of any
gender shall be held and construed to include the other gender, and
words in the singular number shall be held and construed to include the
plural and words in the plural number shall be held and construed to
include the singular, unless in each instance the context requires
otherwise.
(n) Descriptive Headings. The headings in this Agreement are
for convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
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EXECUTED as of the date first written above.
DEBTOR:
EARTHCARE ACQUISITION SUB, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
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SCHEDULE 1
TO
SECURITY AGREEMENT
DATED MARCH 5, 2001
The other addresses referenced in Subsection 3(g) are as follows:
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FINANCING STATEMENT
This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.
1 The name and address of the debtor ("Debtor") is:
EARTHCARE ACQUISITION SUB, INC.
is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
2 The name and address of the secured party ("Secured Party") is:
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇, Independent Executor of the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ Opportunity Fund, ▇.▇.
▇▇▇▇▇▇▇ Opportunity Fund (Institutional), L.P.
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):
All rights, titles, and interests now owned or hereafter acquired by
Debtor in:
All present and future accounts, chattel paper, documents, and
instruments (including any right to payment of a monetary
obligation, whether or nor earned by performance: for any property
that is sold, leased, licensed, assigned or otherwise disposed of;
for services rendered or to be rendered; for a secondary obligation
incurred or to be incurred; and for insurance company receivables ),
now or hereafter owned, held, or acquired by Debtor, together with
any and all books of account, customer lists and other records
relating in any way to the foregoing (including, without limitation,
computer software, whether on tape, disk, card, strip, cartridge or
any other form), and in any case where an account arises from the
sale of property, the interest of Debtor in such property.
All present and hereafter acquired inventory (including without
limitation, all goods that are leased by a person as lessor, are
held by a person for sale or lease or to be furnished under a
contract of service, are furnished by a person under a contract of
service, or consist of raw materials, work in process, or materials
used or consumed in a business) held, possessed, owned, held on
consignment, or held for sale, lease, return or to be furnished
under contracts of services, in whole or in part, by Debtor wherever
located, and all records relating in any way to the foregoing
(including,
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without limitation, any computer software, whether on tape, disk,
card, strip, cartridge or any other form).
All equipment (including without limitation, all goods other than
inventory) and fixtures of whatsoever kind and character now or
hereafter possessed, held, acquired, leased, or owned by Debtor and
used or usable in Debtor's business, together with all replacements,
accessories, additions, substitutions and accessions to all of the
foregoing, and all records relating in any way to the foregoing
(including, without limitation, any computer software, whether on
tape, disk, card, strip, cartridge or any other form). To the extent
that the foregoing property is located on, attached to, annexed to,
related to, or used in connection with, or otherwise made a part of,
and is or shall become fixtures upon, real property, such real
property and the record owner thereof is described on Exhibit A
attached hereto and made a part hereof.
All now existing or hereafter acquired general intangibles of every
kind and nature, all payment intangibles, permits, regulatory
approvals, copyrights, patents, trademarks, service marks, trade
names, mask works, goodwill, licenses and all other intellectual
property owned by Debtor or used in Debtor's business.
All investment property of every kind and nature, including all
securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity accounts, or commodity
contracts, now or hereafter owned, held, or acquired by Debtor.
All deposit accounts now or hereafter owned, held, or acquired by
Debtor.
The term Collateral, as used herein, shall also include all products
and proceeds of all of the foregoing (including without limitation,
insurance payable by reason of loss or damage to the foregoing
property) and any property, securities, guaranties or monies of Debtor
which may at any time come into the possession of Secured Party.
4 This Financing Statement is presented for filing to the Secretary of
State of Illinois.
EARTHCARE ACQUISITION SUB, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chief Financial Office