SECURITY AGREEMENT
This Security Agreement ("Agreement") is made and entered into this 19th
day of June, 1997, by GENERAL SERVICE CORPORATION, a Delaware corporation
("Debtor"), in favor of LIBERTY BANK AND TRUST COMPANY OF TULSA, NATIONAL
ASSOCIATION ("Secured Party").
RECITALS
A. Pursuant to that certain Credit Agreement dated August 30, 1994, as
amended by that certain First Amendment to Credit Agreement dated as of
even date herewith (the same, as amended, supplemented or otherwise
modified from time to time, being hereinafter referred to as the "Credit
Agreement"), among Debtor as a Borrower (as such term is defined in the
Credit Agreement), the other Borrowers and Secured Party, Secured Party has
established in favor of the Borrowers, on the terms and conditions set
forth therein, (i) a revolving credit facility in the principal amount not
to exceed $15,000,000, (ii) a term loan facility in the principal amount
not to exceed $5,000,000, and (iii) an acquisition term loan facility in
the principal amount of $5,000,000.
B. It is a condition precedent to the obligations of Secured Party under
the Credit Agreement that Debtor shall have executed and delivered this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged and in order to induce Secured Party to make loans
and other extensions of credit under the Credit Agreement, Debtor hereby
agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in Credit Agreement. Capitalized terms used herein and
not otherwise defined have the respective meanings assigned to them in the
Credit Agreement.
1.2 Defined Terms. The following terms used herein shall have the meanings
indicated:
Accounts. "Accounts" shall mean and include all accounts (as such term is
defined in Article 9 of the UCC) of Debtor, of every nature, whether now
existing or hereafter arising, including, without limitation, all accounts
receivable and other rights to payment for goods sold or leased or for
services rendered.
Collateral. "Collateral" shall mean and include (i) all Accounts,
(ii) all Inventory, (iii) all General Intangibles, (iv) all books, records,
ledger cards, electronic data processing materials and other general
intangibles relating to the foregoing property, and (v) all Proceeds of
the foregoing property.
General Intangibles. "General Intangibles" shall mean and include (i)
all general intangibles (as such term is defined in Article 9 of the UCC)
of Debtor, of every nature, whether now owned or existing or hereafter
arising or acquired, including, without limitation, all books,
correspondence, credit files, records, computer programs, source codes,
computer tapes, computer cards, computer disks, Permits, know-how,
technologies, trade secrets, claims (including, without limitation, claims
for income tax and other refunds), causes of action, choses in action,
judgments, goodwill, patents, copyrights, brand names, trademarks,
tradenames, service names, service marks, logos, licensing agreements,
franchises, royalty payments, settlements, partnership interests (whether
general, limited or special), interests in joint ventures, contracts,
contract rights and monies due under any contract or agreement, (ii) all
chattel paper of the Borrowers, whether now owned or existing or hereafter
arising or acquired, and (iii) all papers and documents evidencing or
constituting any of the foregoing.
Governmental Authority. "Governmental Authority" shall mean any court or
any administrative or governmental department, commission, board, bureau,
authority, agency or body of any governmental entity, whether foreign or
domestic, and whether national, federal, state, county, city, municipal or
otherwise.
Indebtedness. "Indebtedness" shall mean and include all liabilities,
obligations and indebtedness of the Borrowers to Secured Party, of every
kind and description, now existing or hereafter incurred, direct or
indirect, absolute or contingent, due or to become due, matured or
unmatured, and whether or not of the same or a similar class or
character as the Credit Facilities and whether or not currently
contemplated by Secured Party or the Borrowers, including, without
limitation, (i) all Advances, Letters of Credit and Check Payment Letters
(including interest accruing thereon and fees payable in respect thereof),
(ii) all Reimbursement Obligations, (iii) all liabilities, obligations and
indebtedness of the Borrowers to the Bank arising out of or relating to
the Credit Agreement, this Agreement, the Credit Facilities, the Notes,
the L/C Agreements or any other of the Loan Documents, (iv) any overdrafts
by any of the Borrowers on any deposit account maintained with the Bank,
and (v) any and all extensions and renewals of any of the foregoing.
Inventory. "Inventory" shall mean and include all inventory (as such term
is defined in Article 9 of the UCC) of Debtor, now existing or hereafter
acquired and wherever located, including, without limitation, (i) raw
goods and raw materials, (ii) goods in process, (iii) finished goods, (iv)
materials, supplies, containers, boxes and packaging materials, (v)
materials used or consumed in the course of business, and (vi) all other
goods held or stored for sale or lease or furnished or to be furnished
under contracts of service.
Permit. "Permit" shall mean any permit, certificate, consent, franchise,
concession, license, authorization, approval, filing, registration or
notification from or with any Governmental Authority or other Person.
Person. "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party or
Governmental Authority.
Proceeds. "Proceeds" shall mean all proceeds of all or any portion of the
Collateral within the meaning of Article 9 of the UCC, including, without
limitation, (i) all proceeds of any insurance, judgment, indemnity,
warranty or guaranty payable to or for the account of Debtor with respect
to all or any portion of the Collateral, (ii) all proceeds in the form of
accounts, collections, contract rights, documents, instruments, chattel
paper or general intangibles relating in whole or in part to the Collateral,
and (iii) all payments, in any form whatsoever, made or due and payable to or
for the account of Debtor in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any portion of the Collateral
by any Governmental Authority.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of Oklahoma.
1.3 Interpretations. Unless otherwise defined herein, (i) terms defined
in the UCC are used herein as so defined, and (ii) the singular shall be
deemed to include the plural and the plural shall be deemed to include the
singular.
ARTICLE II
GRANT OF SECURITY INTEREST
In order to secure the prompt and complete payment and performance when due
(whether at the stated maturity, upon a mandatory prepayment, by acceleration
or otherwise) of the Indebtedness, Debtor hereby assigns, transfers and
pledges unto Secured Party, and grants to Secured Party a continuing security
interest in, the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Debtor hereby represents and warrants to Secured Party that:
3.1 Ownership; Free of Encumbrances. Debtor is and will remain the legal
and beneficial owner of the Collateral, free and clear of any prior Liens,
except the security interest created hereby and except as set forth in
Subsection 5.6 of the Credit Agreement. Debtor will defend the Collateral
against all claims and demands of all persons at any time claiming the
Collateral or any interest therein, other than persons holding Liens
permitted under Subsection 5.6 of the Credit Agreement. No security
agreement, financing statement or other public notice with respect to all
or any part of the Collateral is on file or of record in any public office
except such as may have been filed pursuant to this Agreement and except as
set forth in Schedule I attached hereto. Debtor has exclusive possession
and control of the Collateral.
3.2 Conflicting Agreements and Charter Provisions. Neither the execution
and delivery of this Agreement, nor fulfillment nor compliance with the
terms and provisions hereof, will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, the charter or bylaws of Debtor, or any
agreement, instrument, judgment, decree, statute, law, rule or regulation
to which Debtor is subject or by which the Collateral is bound or
affected, or require any authorization, consent, approval or other action
by, or notice to any Governmental Authority. No consent or authorization
of or filing with or other act by and in respect of any other Person is
required in connection with the execution, delivery, performance, validity
or enforceability of this Agreement.
3.3 Actions and Proceedings. There is no action or proceeding against or
investigation of Debtor, pending or threatened, which questions the
validity of this Agreement or any of the Loan Documents or which is likely
to have a Material Adverse Effect.
3.4 Organization; Authority. Debtor is and will remain a corporation,
duly organized, validly existing, and in good standing under the laws of
the state of Oklahoma and is duly qualified to conduct business and in
good standing under the laws of the state of Georgia and all other states
or jurisdictions in which it does business. Debtor now has and will have
at all material times requisite corporate power and authority to enter
into this Agreement and to carry out the terms and provisions hereof.
This Agreement has been duly authorized by all necessary corporate action
on the part of Debtor, has been duly executed and delivered by Debtor's duly
authorized officers, and constitutes the legal, valid and binding obligation
of Debtor, enforceable in accordance with its terms (except as enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, and
(ii) general principles of equity).
3.5 Location of Principal Office; Records. The chief place of business
and chief executive office of Debtor and the offices where Debtor keeps
its records concerning the Accounts and the original copies of all contracts
that evidence or constitute Collateral are located at the following address:
57 East Broad St.
Newnan, Georgia 30264
Schedule II attached hereto contains a complete and accurate list of the
locations of all Inventory. Within the last four months, Debtor has not
changed its name, identity or corporate structure (by reorganization or
otherwise), or its address.
3.6 Tradenames. Schedule III attached hereto contains a complete and
accurate list of (i) all names under which Debtor is or has been doing
business within the last twelve months, including, without limitation,
tradenames, division names, and fictitious names, (ii) all tradenames
owned by Debtor or that Debtor is licensed to use, and (iii) all tradenames
that Debtor has established the right to use.
3.7 Instruments. None of the Accounts is currently evidenced by a
promissory note or other instrument.
3.8 Accounts. The amount represented to Secured Party from time to time
as owing by each account debtor or by all account debtors in respect of
the Accounts will at no time be other than the correct amount actually
owing by such account debtor or debtors thereunder. No consent of any
account debtor in respect of any account is required, or purports to be
required, in connection with the execution, delivery and performance of
this Agreement by Debtor. Each of the Accounts is in full force and effect
and constitutes a valid and legally enforceable obligation of the account
debtor in respect thereof.
3.9 Law and Ordinances. Debtor has not violated and will not violate any
applicable statute, regulation or ordinance of any Governmental Authority
in any material adverse respect as to the ownership, acquisition, use and
operation of the Collateral including, without limitation, any Environmental
Laws.
3.10 Permits. Debtor has acquired or will acquire at appropriate times,
and is in compliance with the terms of, all Permits which in any respect
are necessary for the ownership, maintenance, use or operation of the
Collateral, and all such Permits shall be valid and subsisting at all
pertinent times.
ARTICLE IV
COVENANTS
Debtor covenants and agrees with Secured Party that, from and after the
date of this Agreement until the Indebtedness is paid in full:
4.1 Insurance. Debtor, at its cost and expense, shall maintain in full
force and effect liability and casualty insurance on the Inventory as
required under the terms of the Credit Agreement.
4.2 Recordings, Filings, Further Assurances. Debtor agrees that from
time to time, at the expense of Debtor, Debtor will promptly execute and
deliver all further instruments and documents, and take all further action
that may be necessary or desirable, or that Secured Party may reasonably
request, in order to continue, perfect and protect any security interest
granted hereby or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Debtor will: (i) mark
conspicuously each item of chattel paper included in the Accounts with a
legend in form and substance satisfactory to Secured Party, indicating that
such chattel paper is subject to the security interest granted hereby; (ii)
if any of the Accounts shall be evidenced by a promissory note or other
instrument, deliver and pledge to Secured Party such note or instrument
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party; (iii)
execute and file such financing or continuation statements or amendments
thereto and such other instruments or notices as may be necessary or
desirable, or as Secured Party may request, in order to perfect and
preserve the security interest granted or purported to be granted hereby;
(iv) deliver to Secured Party promptly upon receipt thereof all promissory
notes and other instruments representing or evidencing any of the
Collateral; and (v) prepare and furnish to Secured Party upon request such
lists of the Accounts as Secured Party may, from time to time, reasonably
request. Debtor hereby authorizes Secured Party to file one or more
financing or continuation statements and amendments thereto relative to all
or part of the Collateral without the signature of Debtor, where permitted
by law and to execute the same as attorney-in-fact for Debtor to the extent
Debtor's signature is required by law.
4.3 Records and Inspection; Field Audits. Debtor shall keep and shall
make available to Secured Party at reasonable times, accurate and complete
books and records with respect to the Collateral and Debtor's business
generally, in accordance with generally accepted accounting principles or
other reasonable and sound business practices, including a record of all
payments received and any credits granted on any of the Accounts, and
Secured Party shall have the right to inspect and copy such records and to
inspect the Collateral at reasonable times. Without limiting the
generality of the foregoing, Debtor will: (i) permit Secured Party,
through its authorized representatives, to conduct periodic field audits
of Debtor and to review Debtor's operations, books and records, accounts
receivable methods and controls, and other matters relating to the value
and maintenance of the Collateral and Debtor's financial reporting, and
(ii) afford any authorized representative of Secured Party with access to
any Property owned by Debtor, during business hours and upon reasonable
notice. For the further security of Secured Party, Secured Party shall
have a security interest in all such books and records pertaining to the
Collateral, and after any Event of Default Debtor shall turn over any such
books and records to Secured Party or to its representatives during normal
business hours at the request of Secured Party.
4.4 Location of Office and Records; Change of Name. Debtor shall keep
its chief place of business and chief executive office, and the offices
where it keeps its records concerning the Accounts and the original copies
of all contracts and chattel paper that evidence or constitute Collateral,
at the location therefor specified in Subsection 3.5 above and shall
notify Secured Party at least thirty (30) days prior to any change from
said location. Debtor will not change its name, identity or corporate or
other structure to such an extent that any financing statement filed by
Secured Party in connection with this Agreement would become seriously
misleading, unless it shall have given Secured Party at least thirty (30)
days prior written notice thereof and prior to effecting any such change
taken such steps as Secured Party may deem necessary or advisable to
continue the perfection and priority of the security interest granted
pursuant hereto.
4.5 Removal of Inventory. Debtor shall keep the Inventory at the
locations listed on Schedule II or, with the prior written consent of
Secured Party, at such other location in a jurisdiction in which all
actions required by Subsection 4.2 shall have been taken with respect to
the Collateral as Debtor may have advised Secured Party at least thirty
(30) days prior to such removal.
4.6 Debtor Remains Liable. Debtor shall remain liable under all
contracts or other agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed. The exercise
by Secured Party of any of the rights hereunder shall not release Debtor
from any of its duties or obligations under such contracts or agreements
included in the Collateral. Secured Party shall not have any obligation or
liability under such contracts or agreements included in the Collateral by
reason of this Agreement, nor shall Secured Party be obligated to perform
any of the obligations or duties of Debtor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder. Debtor
shall at its expense perform and observe all of the terms and provisions of
such contracts to be performed or observed by it to maintain such contracts
in full force and effect, enforce such contracts in accordance with their
terms, and take all such action to such ends as may from time to time be
reasonably requested by Secured Party.
4.7 Debtor to Pay Taxes. Debtor will pay promptly when due all property
and other taxes, assessments, and governmental charges or levies imposed
upon and claims (including claims for labor, materials and supplies)
against the Collateral, except to the extent (i) the validity thereof is
being contested in good faith and by proper proceedings, (ii) proper
reserves are being maintained in connection therewith, in accordance with
generally accepted accounting principles, consistently applied, and (iii)
the proceedings referred to in clause (i) above could not subject Secured
Party to any civil or criminal penalty or liability or involve any risk of
sale, forfeiture or loss of any of the Collateral.
4.8 Transfers and Other Liens. Debtor shall not: (a) sell, assign, or
otherwise dispose of or grant any option with respect to any of the
Collateral (except as permitted by Subsection 7.2 of the Credit
Agreement), or (b) create or suffer to exist any lien upon or with respect
to any of the Collateral (except as permitted by Subsection 7.1 of the
Credit Agreement).
4.9 Limitations on Modifications, Waivers or Extensions of Agreements
Giving Rise to Accounts. Debtor will not (i) amend, modify, terminate or
waive any provision of any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely affect
the value of such Account as Collateral, or (ii) fail to exercise promptly
and diligently each and every material right which it may have under each
agreement giving rise to an Account (other than any right of termination).
Debtor will deliver to Secured Party a copy of each material demand,
notice or document sent or received by it relating in any way to any
amendment, modification, termination or waiver of any provision of any
agreement giving rise to an Account.
4.10 Secured Party's Rights and Duties. Debtor shall remain liable under
the Accounts to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with and
pursuant to the terms and provisions of each Account. Secured Party shall
not have any obligation or liability under any Accounts by reason of or
arising out of this Agreement, or the receipt by Secured Party of any
payment relating to any Account pursuant hereto, nor shall Secured Party
be required or obligated in any manner to perform or fulfill any of the
obligations of Debtor under or pursuant to any Account or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by Secured Party or the sufficiency of any performance by
any party under any Account or to present or file any claim, or to take
any action to collect or enforce any performance or the payment of any
amounts which have been assigned to Secured Party or to which Secured
Party may be entitled at any time or times.
4.11 Collection of Accounts and Proceeds. Debtor shall cause all payments
from account debtors on any of the Accounts to be remitted directly to a
"lockbox" maintained with Secured Party. Until further notice from
Secured Party, any proceeds of Accounts remitted to the lockbox, whether
consisting of checks, notes, drafts, bills of exchange, money orders,
commercial paper of any kind whatsoever, or other documents received in
payment of any Accounts or in payment for any Inventory, shall be
deposited by Secured Party in an operating account maintained by Matrix
with Secured Party (subject to Secured Party's established policies on
availability of uncollected funds). Such proceeds when deposited shall
continue to be collateral security for all of the Indebtedness and shall
not constitute payment thereof until applied as hereinafter provided. Upon
the occurrence and during the continuation of an Event of Default, Secured
Party may apply all or any part of the funds on deposit in said operating
account on account of the principal of and/or interest on any of the
Indebtedness, the order and method of any such application to be in the
sole discretion of Secured Party. If an Event of Default shall have
occurred and be continuing, at Secured Party's request Debtor shall deliver
to Secured Party all original and other documents evidencing and relating
to the sale and delivery of Inventory or the performance of labor or
services which created the Accounts, including, but not limited to, all
original orders, invoices, and shipping receipts. Secured Party may, at
any time after the occurrence and during the continuation of any Event of
Default, notify account debtors that the Accounts have been assigned to
Secured Party and that payment shall be made directly to Secured Party, and
Debtor will so notify such account debtors on the request of Secured Party.
Secured Party may in its own name or in the name of others, at any time
after the occurrence and during the continuation of any Event of Default,
communicate with account debtors in order to verify with them the existence,
amount, and terms of any Accounts.
ARTICLE V
DEFAULT
The term "Event of Default" for all purposes of this Agreement shall mean
the occurrence of an "Event of Default" as defined in the Credit Agreement.
ARTICLE VI
REMEDIES
6.1 Acceleration of Indebtedness. Upon the occurrence of any Event of
Default, Secured Party may, at its option, without notice or demand,
terminate its obligations to Debtor (including the Revolving Commitment as
defined in the Credit Agreement) and declare the Indebtedness to be
immediately due and payable, whereupon the same shall become forthwith due
and payable.
6.2 Other Remedies. Upon the occurrence and during the continuation of
any Event of Default, Secured Party shall be entitled to exercise all
remedies available to it under the Loan Documents (as defined in the
Credit Agreement) or otherwise under applicable law, including, without
limitation, the following:
6.2.1All Legal Remedies. Proceed to selectively and successively enforce
and exercise any and all rights and remedies which Secured Party may have
under this Agreement, any other applicable agreement or applicable law,
including, without limitation: (i) commencing one or more actions against
Debtor and reducing the claims of Secured Party against Debtor to judgment,
(ii) foreclosing, realizing upon, or otherwise enforcing Secured Party's
security interest in the Collateral, or any portion thereof, or other
enforcing Secured Party's rights and remedies in respect of the Collateral,
through judicial action or otherwise, including all available remedies under
the applicable provisions of the UCC, and (iii) paying or discharging of any
claim or Lien, prior or subordinate, in respect of or affecting the
Collateral.
6.2.2Cash Equivalent Items. As regards any portion of the Collateral
consisting of cash equivalent items (i.e., checks, drafts or other items
convertible at face), immediately apply them against the Indebtedness and
for this purpose Debtor agrees that such items will be considered identical
in character to cash proceeds.
6.2.3Disposition. Sell, lease or otherwise dispose of the Collateral at
private or public sale, in bulk or in parcels and, where permitted by law,
without having the Collateral present at the place of sale. Unless the
Collateral is perishable or it appears that the value of the Collateral
will decline speedily or the Collateral is a type customarily sold on a
recognized market, or unless Debtor has signed a statement (after the
occurrence of an Event of Default) renouncing or modifying Debtor's right
to notice, Secured Party will give Debtor reasonable notice of the time
and place of any public sale or other disposition thereof or the time
after which any private sale or other disposition thereof is to be made.
The requirements of reasonable notice shall be met if such notice is given
to Debtor at least ten (10)days before the time of any such sale or
disposition.
6.2.4Costs and Expenses. Recover from Debtor an amount equal to all costs,
expenses and attorney's fees incurred by Secured Party in connection with
the exercise of the rights contained or referred to herein, together with
interest on such sums at the default rate applicable to the Term Note from
time to time.
6.2.5Collections. Exercise any and all rights and remedies of Debtor
relating to the Collateral, including, but not by way of limitation, the
right to collect, demand, receive, settle, compromise, adjust or sue for
all amounts due thereon or thereunder and the right either in Secured
Party's own name or in the name of Debtor, to take such legal or other
action as Debtor might have taken except for this Agreement.
6.3 Letters of Credit. Upon the acceleration of the Indebtedness after
an Event of Default an amount equal to the aggregate stated amount of all
outstanding Letters of Credit issued by Secured Partyfor the account of
the Borrowers shall, at Secured Party's option and without demand upon or
further notice to Debtor, be deemed (as between Secured Party and the
Borrowers) to have been paid or disbursed by Secured Party under the Letters
of Credit (notwithstanding that such amounts may not in fact have been so
paid or disbursed), and a loan to the Borrowers in the amount of such Letters
of Credit to have been made and accepted, which loan shall be immediately
due and payable and shall bear interest at the post default rate provided in
the Revolving Note. In lieu of the foregoing, at the election of Secured
Party, Debtor and/or the other Borrowers shall, upon Secured Party's demand,
deliver to Secured Party cash, or other collateral of a type satisfactory to
Secured Party, having a value, as determined by Secured Party, equal to the
aggregate outstanding Letters of Credit. Any such collateral and/or any
amounts received by Secured Party in payment of the loan made pursuant to
this Section shall be held by Secured Party in a separate account
appropriately designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and retained by Secured Party as
collateral security for the Indebtedness and each of the Letters of Credit.
Such amounts shall not be used by Secured Party to pay any amounts drawn or
paid under or pursuant to any Letter of Credit, but may be applied to
reimburse Secured Party for drawings or payments under or pursuant to Letters
of Credit which Secured Party has paid or, if no such reimbursement is
required, to payment of suchother Indebtedness as Secured Party shall
determine. At the option ofSecured Party, proceeds of sale of the
Collateral may be used to fund thecash collateral account herein provided
for. Any amounts remaining in any cash collateral account established
pursuant to this Section following payment in full of the Indebtedness,
which amounts are not (as determined by Secured Party) to be applied to
reimburse Secured Party for amounts actually paid by Secured Party in
respect of a Letter of Credit, shall be returned to the Borrowers (after
deduction of Secured Party's reasonable and necessary expenses).
6.4 Selective Enforcement. In the event Secured Party shall elect to
selectively and successively enforce its rights and remedies in respect of
any of the Collateral, pursuant to any applicable agreements or otherwise,
such action shall not be deemed a waiver or discharge of any other right,
remedy, lien or encumbrance until such time as Secured Party shall have
been paid in full the Indebtedness.
6.5 Waiver of Default. Secured Party may, by an instrument in writing
signed by Secured Party, waive any Event of Default which shall have
occurred and any of the consequences thereof and, in such event, Secured
Party and Debtor shall be restored to their respective former positions,
rights and obligations. Any Event of Default so waived shall, for all
purposes of this Agreement, be deemed to have been cured and not to be
continuing, but no such waiver shall extend to any subsequent or other
default or impair any consequence thereof.
6.6 Deposits; Setoff. Regardless of the adequacy of any other Collateral
held by Secured Party, any deposits or other sums credited by or due from
Secured Party to Debtor shall at all times constitute collateral security
for the Indebtedness and may be set off against the Indebtedness. The
rights granted in this subsection shall be in addition to the rights of
Secured Party under any statutory banker's lien or common law right of
setoff.
6.7 Application of Payments. During the continuance of any Event of
Default, all payments received by Secured Party in respect of the
Indebtedness, whether from Debtor, any of the other Borrowers, any
guarantor, recoveries upon any portion of the Collateral or otherwise, may
be applied by Secured Party to any liabilities, obligations or indebtedness
included in the Indebtedness selected by Secured Party in its sole and
exclusive discretion.
6.8 Secured Party's Satisfaction of Debtor's Obligations. Upon the
occurrence of any event which, but for the giving of notice or the passage
of time, would constitute an Event of Default, Secured Party may, but
shall not be obligated to, pay, satisfy or cure any liability or
obligation of Debtor arising out of or relating to this Agreement or the
Notes, upon prior notice to Debtor, and Debtor will from time to time
within ten (10) days after a request made by Secured Party, reimburse
Secured Party for all amounts expended, advanced or incurred by Secured
Party in connection with such payment, cure or satisfaction, together with
interest on such sums at the default rate applicable to the Term Note from
time to time.
ARTICLE VII
MISCELLANEOUS
From and after the date of this Agreement and until the Indebtedness is paid
in full:
7.1 Power of Attorney. Debtor hereby irrevocably constitutes and appoints
Secured Party, with full power of substitution, as its full and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of Debtor and in the name of Debtor or in its own name from time
to time in Secured Party's discretion, for the purposes of carrying out this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement and, without limiting the generality of the
foregoing, Debtor hereby gives Secured Party the power and right on behalf of
Debtor, without notice to or assent by Debtor to do the following:
(a) At any time when any Event of Default shall have occurred and be
continuing, to take possession of and endorse and collect any checks,
drafts, notes, acceptances, or other instruments for the payment of money
due under or with respect to any Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Secured Party for the purpose of collecting
any and all such monies due or with respect to such Collateral whenever
payable;
(b) Upon the occurrence and during the continuance of any Event of Default,
(i) to direct any party liable for any payment under any of the Collateral
to make payment of any and all monies due or to become due thereunder
directly to Secured Party, or as Secured Party shall direct; (ii) to ask
for or demand, collect, receive payment of and receipt for, any and all
monies, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) to assign and endorse
any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral;
(iv) to commence and prosecute any suits, actions, or proceedings at law
or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (v) to defend any suit, action, or proceeding brought
against such Debtor with respect to any Collateral; and (vi) to settle,
compromise or adjust any suit, action or proceeding described in the
preceding clause and, in connection therewith, to give such discharges
or releases as Secured Party may deem appropriate.
All acts of such attorney or designee are hereby ratified and approved and
such attorney or designee shall not be liable for any acts of omission or
commission nor for any error of judgment or mistake of fact or law. This
power of attorney being coupled with an interest is irrevocable while any
of the Indebtedness shall remain unpaid.
7.2 Amendment; Entire Agreement. This Agreement cannot be amended,
modified or supplemented, except by an agreement in writing signed by the
party or parties against whom enforcement of any waiver, change,
amendment, modification or discharge is sought. This Agreement constitutes
the entire agreement of the parties hereto with respect to the matters
dealt with herein, except as expressly indicated to the contrary herein.
7.3 Notices. All notices, requests and demands required or authorized
hereunder shall be given in the manner set forth in Subsection 10.3 of the
Credit Agreement.
7.4 Waivers; Consents. Debtor hereby (i) consents to all extensions and
renewals of the Indebtedness, (ii) consents to the addition, release or
substitution of any person other than Debtor liable on any portion of the
Indebtedness, (iii) waives all demands, notices and protests of any action
taken by Secured Party pursuant to this Agreement or in connection with
the Indebtedness, (iv) waives any indulgence by Secured Party, and (v)
consents to any substitutions for, exchanges of or releases of the Collateral
or any portion thereof or of any other property securing the
Indebtedness.
7.5 Survival of Representations and Warranties. All representations and
warranties of Debtor contained herein or made in writing by Debtor in
connection herewith shall continue and shall survive the execution and
delivery of this Agreement.
7.6 Successors and Assigns. All covenants and agreements in this Agreement
made by Debtor and Secured Party shall inure to the benefit of and shall be
binding upon Secured Party and Debtor and their respective successors and
assigns, whether so expressed or not.
7.7 Descriptive Headings. The descriptive headings of the Sections of
this Agreement are inserted for convenience only and do not constitute a
part of the Agreement.
7.8 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED TO AND ACCEPTED BY
SECURED PARTY IN THE STATE OF OKLAHOMA, IS TO BE PERFORMED IN THE STATE OF
OKLAHOMA, SHALL BE DEEMED A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
OKLAHOMA, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF
OKLAHOMA.
7.9 Severability. In the event any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof.
7.10 Indemnity and Expenses. Debtor agrees to indemnify Secured Party
from and against any and all claims, losses, liabilities or expenses
(including without limitation legal fees and expenses) (i) arising out of
or resulting from this Agreement (including, without limitation, enforcement
of this Agreement), (ii) resulting from any delay in paying excise, sales or
other taxes in connection with the Collateral, or (iii) with respect to or
resulting from any failure to comply with any requirement of law with respect
to the Collateral, except claims, losses or liabilities resulting from
Secured Party's gross negligence or willful misconduct. Debtor will, upon
demand, pay to Secured Party the amount of any and all expenses, including
the fees and disbursements of its counsel and of any experts and agents
which Secured Party may reasonably incur in connection with (i) the execution
and delivery of this Agreement, (ii) any proposed amendment or modification
of this Agreement, (iii) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon any of the Collateral,
(iv) the exercise or enforcement of any of the rights of Secured Party
hereunder, or (v) failure of Debtor to perform or observe any of the
provisions hereof.
7.11 Preservation of Collateral. Secured Party's sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in
its possession under Section 9-207 of the UCC, or otherwise, shall be to
deal with it in the same manner as Secured Party deals with similar
property for its own account. Neither Secured Party nor any of its
directors, officers, employees, or agents shall be liable for failure to
demand, collect, or realize upon all or any part of the Collateral, or for
any delay in doing so, or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Debtor, or otherwise.
7.12 No Waiver by Secured Party. Secured Party shall not by any act (except
by a written instrument pursuant to Subsection 7.2 hereof), delay,indulgence,
omission, or otherwise, be deemed to have waived any right orremedy
hereunder or to have acquiesced in any Event of Default, or in any breach of
any of the terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of Secured Party, any right, power, or
privilege hereunder, shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other
or further exercise thereof, or the exercise of any other right, power or
privilege. A waiver by Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
Secured Party would otherwise have on any future occasion.
7.13 Jurisdiction and Venue. All actions or proceedings with respect to this
Agreement may be instituted in any state or federal court sitting in Tulsa
County, Oklahoma, as Secured Party may elect, and by execution and delivery
of this Agreement Debtor irrevocably and unconditionally (i) submits to the
nonexclusive jurisdiction (both subject matter and person) of each such
court, and (ii) waives (a) any objection that Debtor may now or hereafter
have to the laying of venue in any of such courts, and (b) any claim that
any action or proceeding brought in any such court has been brought in an
inconvenient forum.
7.14 Financing Statements. A carbon, photographic or other reproduction of
this instrument or any financing statement in connection herewith shall
be sufficient as a financing statement for any and all purposes.
IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement to and
in favor of Secured Party as of the date first set forth above.
GENERAL SERVICE CORPORATION,
a Delaware corporation
By: /s/C. William Lee
-----------------
Name: C. William Lee
Title: Secretary
LIBERTY BANK AND TRUST COMPANY OF TULSA,
NATIONAL ASSOCIATION
By: /s/Kevin C. Short
-----------------
Name: Kevin C. Short
Title: Banking Officer