EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made as of the 30th day of
September, 2002 by AMX Corporation, a Texas corporation (hereinafter called
"Debtor", whether one or more), in favor of BANK ONE, NA, a national banking
association ("Bank"). Debtor hereby agrees with Bank 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.
(b) The term "Code" shall mean the Uniform Commercial 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:
(i) All present and future accounts, chattel paper,
documents, instruments, deposit accounts and general intangibles
(including any right to payment for goods sold or services
rendered arising out of the sale or delivery of personal property
or work done or labor performed by Debtor), 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 goods, the interest of Debtor in such goods.
(ii) All present and hereafter acquired inventory
(including without limitation, all raw materials, work in process
and finished goods) 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, 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).
(iii) All equipment 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, 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
(iv) All of Debtor's Intellectual Property.
"Intellectual Property" means (i) all of Debtor's Copyrights,
Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use thereof; (ii) any
trade secrets and any intellectual property rights in computer
software and computer software products now or later existing,
created, acquired or held; (iii) all design rights which may be
available to Debtor now or later created, acquired or held; (iv)
any claims for damages (past, present or future) for
infringement of any of the rights above, with the right, but not
the obligation, to sue and collect damages for use or
infringement of the intellectual property rights above; and (v)
all proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments. "Copyrights" are all
copyright rights, applications or registrations and like
protections in each work or authorship or derivative work,
whether published or not (whether or not it is a trade secret)
now or later existing, created, acquired or held. "Trademarks"
are trademark and service mark rights, registered or not,
applications to register and registrations and like protections,
and the entire goodwill of the business of Assignor connected
with the trademarks. "Patents" are patents, patent applications
and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions and
continuations-in-part of the same. "Mask Works" are all mask
works or similar rights available for the protection of
semiconductor chips, now owned or later acquired.
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 (as hereinafter defined). 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.
The term Collateral does not include any license or contract rights to
the extent (i) the granting of a security interest in it would be
contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent the prohibition is enforceable
under applicable law, including, without limitation, Section 9.406(d)
of the Code) without the consent of the licensor or other party (but
only to the extent such consent has not been obtained).
(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, (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
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.
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(f) The term "Obligated Party" shall mean any party other than
Borrower who secures, guarantees and/or is otherwise obligated to pay
all or any portion of the Indebtedness.
(g) The term "Secured Party" shall mean Bank, its successors and
assigns, including without limitation, any party to whom Bank, or its
successors or assigns, may assign its rights and interests under this
Agreement.
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 grants to Secured Party a continuing security interest in
the Collateral.
3. REPRESENTATIONS AND WARRANTIES. Debtor hereby represents and
warrants the following to Secured Party:
(a) Due Authorization. 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, or by all necessary partnership
action, to the extent Debtor is a partnership.
(b) 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.
(c) 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 and Permitted Liens. As used herein, the
term "Permitted Liens" means the following: (i) liens for taxes,
assessments or other governmental charges or levies not delinquent,
or, being contested in good faith and with diligence by the Borrower
and for which Borrower has established and maintains reserves for such
contested tax, assessment or other governmental charge in accordance
with GAAP; provided that such lien shall have no effect on the
priority of the liens in favor of Bank or the value of assets in which
Bank has such a lien and a stay of enforcement of any such lien shall
be in effect; (ii) deposits or pledges securing obligations under
worker's compensation, unemployment insurance, social security or
public liability laws or similar legislation; (iii) deposits or
pledges securing bids, tenders, contracts (other than contracts for
the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the
ordinary course of Borrower's business, (iv) judgment liens that have
been stayed or bonded; (v) mechanics', workers', materialmen's or
other like liens arising in the ordinary course of Borrower's business
with respect to obligations which are not due; (vi) purchase money
liens placed upon fixed assets hereafter acquired to secure a portion
of the purchase price thereof, provided that any such lien shall not
encumber any other property of Borrower; and (vii) liens in favor of
Bank. No dispute, right of setoff, counterclaim or defense exists with
respect to all or any part of the Collateral included in the Borrowing
Base (as defined in the Loan Agreement). Debtor has not executed any
other security agreement currently affecting the Collateral and no
effective financing statement or other
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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.
(d) 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 applicable to Debtor or any of its property, (B) the
articles or certificate of incorporation, charter, bylaws or
partnership agreement, 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.
(e) 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
other than Permitted Liens. 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.
(f) 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
signature page hereof. Except as specified elsewhere herein, all
Collateral shall be kept at such address and such other addresses as
may be listed in Schedule "A" attached hereto and made a part hereof.
(g) 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.
(h) 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, 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
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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.
(i) 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.
(j) Accounts. Each account included in the Borrowing Base (as
defined in the Loan Agreement) 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 except for any such contra accounts, setoffs, defenses
or counterclaims that could not reasonably be expected to result in a
material adverse effect on the financial condition of Debtor. 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.
(k) 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.
4. AFFIRMATIVE COVENANTS. 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 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.
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(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 Bank.
(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 and upon not less
than 48 hours advance notice, 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
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 the landlord of
Debtor's chief executive office 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.
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(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(f), 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 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 mark 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) grant a lien 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
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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 signature page hereof and the addresses
specified on Schedule "B" 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 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 in the State of Texas (Debtor's state of incorporation). Without
limitation of any other covenant herein, Debtor will not change the
jurisdiction of its incorporation, 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 (except as otherwise specified) 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.
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(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, from time to
time during the continuation of an Event of Default, in Secured
Party's discretion, 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
obtain and adjust insurance required by Secured Party hereunder; (ii)
to demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of the Collateral; (iii) to receive, endorse and collect any
drafts or other instruments, documents and chattel paper in connection
with clause (i) or (ii) above; and (iv) 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) Request for Environmental Inspections. Upon Secured
Party's reasonable request from time to time, Debtor will obtain at
Debtor's sole expense an inspection or audit of Debtor's operations
from an engineering or consulting firm approved by Secured Party,
indicating the presence or absence of toxic or hazardous substances
and solid wastes on any premises in which Debtor is conducting its
business; provided, however, Debtor will be obligated to pay for the
cost of any such inspection or audit no more than one time in any
twelve (12) month period unless Secured Party has reason to believe
that toxic or hazardous substances or solid wastes have been dumped on
any such premises. If Debtor fails to order or obtain an inspection or
audit within ten (10) days after Secured Party's request, Secured
Party may at its option order such inspection or audit, and Debtor
grants to Secured Party and its agents, employees, contractors and
consultants access to the premises in which it is conducting its
business and a license (which is coupled with an interest and is
irrevocable) to obtain inspections and audits. Debtor agrees to
promptly provide Secured Party with a copy of the results of any such
inspection or audit received by Debtor. The cost of such inspections
and audits shall be a part of the Indebtedness, secured by the
Collateral and payable by Debtor on demand.
(e) 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, during
the continuance of an Event of Default, 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.
(f) Notification of Account Debtors. Secured Party may, during
the continuance of an Event of Default, 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, during the
continuance of an Event of Default, at the expense of Debtor, to
enforce collection of any such accounts or general
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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) Failure to Pay Indebtedness. 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, and the continuation of such failure, refusal or neglect
for ten (10) days; or
(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 and the continuation of such failure
for thirty (30) days (other than the covenants contained in Sections
8, 9 or Addendum 1 of the Loan Agreement, for which there is no grace
period); or
(c) Default Under other Loan Documents. The occurrence of an
event of default hereunder or 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 in excess
of $100,000.00 owing by Borrower or any Obligated Party to any third
party under any agreement or undertaking; or
(f) 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; or (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;
or
(g) Execution on Collateral. The Collateral or any portion
thereof is taken on execution or other process of law in any action
against Debtor; provided that it shall not be an Event of Default
hereunder for a period of thirty (30) days following such taking
(during which time Bank may, in its sole and absolute discretion,
elect to waive the operation of this section with respect to such
taking); or
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(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 and the failure of such holder to revoke such
declaration or cease such foreclosure or other proceedings within 20
days thereafter; or
(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; or
(g) The entry of any judgment against Borrower or the issuance
or entry of any attachment or other lien against any of the property
of Borrower for an amount in excess of $250,000.00, if undischarged,
unbonded or undismissed within thirty (30) days after such entry.
8. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred and is continuing, 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 disposition;
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(vi) buy the Collateral, or any portion thereof, at
any private disposition 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
(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 signature page hereof, ten (10) days prior to the
date of any public disposition, or after which a private disposition,
of any of such Collateral is to be held. Secured Party shall not be
obligated to make any disposition of Collateral regardless of notice
of disposition having been given. Secured Party may adjourn any public
or private disposition from time to time by announcement at the time
and place fixed therefor, and such disposition 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 and is continuing, 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 or other disposition 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 9.615 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.
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(c) Deficiency. In the event that the proceeds of any sale or
other disposition of, collection from, or other realization upon, all
or any part of the Collateral by Secured Party are insufficient to pay
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 or
other disposition 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). WITHOUT
LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON
WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE (WHETHER SOLE, COMPARATIVE OR CONTRIBUTORY) OF SUCH AND/OR ANY
OTHER INDEMNIFIED PERSON, OR FOR WHICH SUCH OR ANY OTHER INDEMNIFIED PERSON
MIGHT OTHERWISE BE LIABLE (BY VIRTUE OF STRICT LIABILITY OR OTHERWISE), except
to the limited extent the Claims against an Indemnified Person are proximately
caused by such Indemnified Person's gross negligence or willful misconduct. If
Debtor or any third party ever alleges such gross negligence or willful
misconduct by any Indemnified Person, the indemnification provided for
- 13 -
in this Section shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the alleged
gross negligence or willful misconduct. 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.
10. MISCELLANEOUS.
(a) Entire Agreement. This Agreement and the Intellectual
Property Security Agreement executed in connection herewith contain
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 and the Intellectual Property Security 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, or the sale or
other disposition of,
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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 Bank'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 signature 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, two (2) business days after 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 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) Termination. It is contemplated by the parties hereto that
from time to time there may be no outstanding Indebtedness, but
notwithstanding such occurrences, this Agreement shall
- 15 -
remain valid and shall be in full force and effect as to subsequent
outstanding Indebtedness. Upon (i) the satisfaction in full of the
Indebtedness, (ii) the termination or expiration of any commitment of
Secured Party to extend credit to Borrower, (iii) written request for
the termination hereof delivered by Debtor to Secured Party, and (iv)
written release or termination delivered by Secured Party to Debtor,
this Agreement and the security interests created hereby shall
terminate. Upon termination of this Agreement and Debtor's written
request, Secured Party will, at Debtor's sole cost and expense, return
to Debtor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof and
execute and deliver to Debtor such documents as Debtor shall
reasonably request to evidence such termination.
(m) 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.
(n) 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.
(o) 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.
- 16 -
EXECUTED as of the date first written above.
Debtor's Address: DEBTOR:
AMX Corporation AMX Corporation, a Texas corporation
3000 Research Drive
Richardson, Texas By: /s/ Jean M. Nelson
Attn: Jean Nelson ----------------------------------
Name: Jean M. Nelson
--------------------------------
Title: VP & CFO
-------------------------------
Secured Party's Address:
Bank One, NA
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: Middle Market Banking Group (Fred Points)
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SCHEDULE "A"
TO
SECURITY AGREEMENT
DATED SEPTEMBER 30, 2002
BY AND BETWEEN
BANK ONE, NA
AND
AMX CORPORATION
The other addresses referenced in Subsection 3(f) are as follows: None.
- 18 -
EXHIBIT "A"
TO
SECURITY AGREEMENT
DATED SEPTEMBER 30, 2002
BY AND BETWEEN
BANK ONE, TEXAS, NATIONAL ASSOCIATION
AND
AMX CORPORATION
Location: 3000 Research Drive
Richardson, Texas 75082
Owner of Record: DALMAC/GOLDCOR REAL ESTATE VENTURE, LTD.,
a Texas limited partnership
Legal Description: 3000 Research Drive
Richardson, Texas 75082
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