EXHIBIT 10.9
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "AGREEMENT") is made and executed as of the
20th day of March, 2003, by ONSITE TECHNOLOGY L.L.C., an Oklahoma limited
liability company, ENVIRONMENTAL SAFEGUARDS, INC., a Nevada corporation, and
NATIONAL FUEL & ENERGY, INC., a Wyoming corporation, each having its principal
office and chief executive office at 2600 South Loop West, Suite 645, Houston,
Texas 77054 (collectively, "DEBTORS" and individually, a "DEBTOR") to and in
favor of RINECO RECYCLING, LLC, an Arkansas limited liability company ("SECURED
PARTY"), having its principal place of business at 629 Vulcan Road, Haskell,
Arkansas 72015.
W-I-T-N-E-S-S-E-T-H:
WHEREAS, Debtors have made application to Secured Party for a term
loan in the principal amount of $1,500,000.00; and
WHEREAS, Secured Party has agreed to extend said loan to Debtors in
accordance with the terms and provisions of that certain Commitment
Letter (herein so called) dated March 6, 2003, executed by and between
Debtors, as Borrowers, and Secured Party, as Lender, the terms of
which Commitment Letter are incorporated herein by reference;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants and agreements herein set forth, the parties, intending to be legally
bound, hereby agree as follows:
SECTION 1. DEFINITIONS.
Except as otherwise defined herein, or unless the context requires
otherwise, the terms used in this Agreement shall have the same meanings
assigned to them in the Commitment Letter.
SECTION 2. THE GRANTING CLAUSES.
In order to secure the payment of the principal of and interest on that
certain Promissory Note of even date herewith in the principal amount of
$1,500,000.00 from Debtors, as Makers, payable to the order of Secured Party, as
Payee (the "NOTE"), Debtors do hereby grant, bargain, sell, transfer, convey,
mortgage, assign, pledge, hypothecate and give a security interest in all and
singular the following described properties, rights, interests and privileges
(the "COLLATERAL") unto Secured Party, its successors and assigns forever, for
the benefit, security and protection of all present and future holders of the
Note from and after the issuance of the Note; provided always, however, that
these presents are upon the express condition that if Debtors shall pay or cause
to be paid all the
SECURITY AGREEMENT
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principal and accrued interest thereon outstanding under the Note, and shall
observe, keep and perform all the terms, conditions, covenants and agreements
contained in this Agreement, the Commitment Letter and any other document
pertaining to or securing the Note, then these presents and the estate hereby
granted and conveyed shall cease and this Agreement shall become null and void;
otherwise, this Agreement shall remain in force and effect. It is the intention
of each Debtor to grant Secured Party all its respective rights, powers,
privileges and options under and to the Collateral effective immediately, and
continuing from and after the date of this Agreement until the Note has been
fully paid and discharged; provided, however, that so long as no Event of
Default shall have occurred and be continuing hereunder or under the Note or any
other document pertaining to or securing the Note, Debtor shall be entitled to
use the Collateral in the conduct of its business. Debtors hereby expressly
consent and agree that Secured Party shall have a security interest in the
following described Collateral and any and all accessions, appurtenances and
additions to and substitutions for any of the foregoing Collateral and all
products and proceeds (including, without limitation, insurance proceeds) and
awards and rents, issues and profits (provided, unless and until an Event of
Default shall have occurred hereunder or under the Note or under any document
pertaining to the Note, Debtor shall be entitled to collect any such rents,
issues and profits) of any of the foregoing Collateral, together with all
renewals and replacements thereof or therefor, whether now owned by Debtors or
existing or hereafter acquired, created or arising (provided, the inclusion of
proceeds does not authorize Debtors to sell, dispose of or otherwise use the
Collateral in any manner not authorized by the Commitment Letter) as security
for the Note:
THE COLLATERAL DESCRIBED AND DEFINED IN THE COMMITMENT LETTER,
INCLUDING, WITHOUT LIMITATION, THE FOLLOWING THREE (3) INDIRECT THERMAL
DESORPTION UNITS:
1. OnSite Indirect Thermal Desorption Unit #9 (Serial # 0009) with
condenser and attached equipment.
Location - 629 Vulcan Road; Haskell, Arkansas 72015
2. OnSite Indirect Thermal Desorption Unit #10 (Serial # 0010) with
condenser and attached equipment.
Location - 210 Magnolia Drive; Galena Park, Texas 77547
3. OnSite Indirect Thermal Desorption Unit #5 (Serial # 0005) with
condenser and attached equipment.
Location - 210 Magnolia Drive; Galena Park, Texas 77547
THE SECURED PARTY'S SECURITY INTEREST SHALL ALSO INCLUDE ANY AND ALL
DOCUMENTS OF TITLE EVIDENCING ANY PART OF SAID COLLATERAL, AND ANY AND ALL CASH
AND NONCASH PROCEEDS FROM ANY SALE OR OTHER DISPOSITION OF ANY COLLATERAL;
PROVIDED, NOTHING CONTAINED HEREIN OR
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IN ANY FINANCING STATEMENT SHALL BE DEEMED PERMISSION OR ASSENT TO ANY SALE OR
DISPOSITION OF SUCH COLLATERAL.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Debtors represent and warrant to Secured Party until payment in full of the
Note as follows:
3.01 REQUIREMENTS OF LAW. All of the requirements of applicable law and
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regulations have been fully complied with and all other acts and things
necessary to make this Agreement a valid, binding and legal instrument to secure
the Note have been done and performed.
3.02 TITLE TO THE COLLATERAL. Debtor OnSite Technology L.L.C. has title
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to the Collateral free and clear of all security interests, liens, claims and
encumbrances of any kind whatsoever other than those created in favor of Secured
Party by this Agreement, and has the right, power and authority to grant a lien
and security interest in the Collateral to Secured Party. No financing statement
covering the Collateral is on file in any public office except those given to
evidence, secure or perfect indebtedness which is owed to Secured Party.
3.03 REPRESENTATIONS AND WARRANTIES IN COMMITMENT LETTER. All of the
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representations and warranties of Debtors set forth in the Commitment Letter are
incorporated herein by reference and made a part of this Agreement as if set
forth in full, and made again by Debtors to Secured Party and are true, complete
and accurate as of the date of this Agreement and shall continue to be true,
complete and accurate at all times hereafter under this Agreement.
3.04 ORGANIZATION, AUTHORITY AND QUALIFICATIONS. (a) Each Debtor is a
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business organization duly organized, validly existing and in good standing
under the laws of the state of its respective organization, (b) each Debtor has
the power and authority to execute, deliver and perform this Agreement and the
other documents to which it is a party, and has the power and authority to
borrow the funds/indebtedness evidenced by the Note, and (c) each Debtor is in
all respects duly qualified and licensed under all applicable laws or
regulations to own its properties as now owned and to carry on its business as
now conducted.
3.05 FINANCIAL STATEMENTS. Debtors have delivered to Secured Party
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certain financial information of Debtors. Such statements fairly reflect the
financial condition and assets and liability of Debtors at such dates and fairly
reflect the results of operations of each Debtor all in conformity with GAAP.
Except as specifically disclosed to Secured Party with respect to Debtor
Environmental Safeguards, Inc., there has been no material adverse change in the
condition, financial or otherwise, of any Debtor since the delivery thereof.
3.06 DEFAULT. No Debtor is in default in any material respect under the
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provisions of any document or instrument evidencing any material obligation,
indebtedness, or liability of such Debtor
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or of any agreement relating thereto, or under any order, writ, injunction, or
decree of any court, nor is any Debtor in default in any material respect under
or in violation of any order, regulation, or demand of any governmental
authority, which default or violation would have consequences which would have a
material adverse effect on the business or properties of such Debtor.
3.07 AUTHORIZATION AND COMPLIANCE WITH LAWS AND MATERIAL AGREEMENTS.
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The execution, delivery and performance of this Agreement, the borrowings under
the Note, and the execution, delivery and performance of the loan documents by
Debtors have been duly authorized by all requisite action on the part of each
Debtor and will not violate the constituent documents of any Debtor, and the
execution, delivery and performance of this Agreement, the Note and any other
loan documents to which each Debtor is a party will not violate any provision of
law, any order of any court or governmental agency, and will not conflict with,
result in a breach of the provisions of, constitute a default under, or result
in the imposition of any lien, charge or encumbrance upon the assets of any
Debtor pursuant to the provisions of any indenture, mortgage, deed of trust,
franchise, permit, license, note, or other agreement or instrument to which any
Debtor is now a party.
3.08 LITIGATION AND JUDGMENTS. There is no action, suit, or proceeding,
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at law or in equity, or by or before any governmental authority, pending or, to
the knowledge of any Debtor, threatened against or affecting such Debtor or
involving the validity or enforceability of any of the loan documents, which, if
adversely determined, would have a material adverse effect on the financial
condition of such Debtor or the ability of such Debtor to perform its
obligations as contemplated by this Agreement. There are no outstanding
judgments against any Debtor.
3.09 CHIEF EXECUTIVE OFFICES. The chief executive offices of each
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Debtor are located at the address set out in the preamble to this Agreement, and
no Debtor will, without prior written notice to Secured Party, relocate its
chief executive offices.
3.10 SOLVENCY. Each Debtor is solvent, able to pay its debts generally
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as such debts mature, and has capital sufficient to carry on its business and
all businesses in which it is engaged. The saleable value of each Debtor's total
assets at a fair valuation, and at a present fair saleable value, is greater
than the amount of such Debtor's debt. No Debtor will be rendered insolvent by
the execution or delivery of this Agreement or of any of the other financing
agreements or by the transactions contemplated hereunder or thereunder.
SECTION 4. COVENANTS
Debtors covenant and agree for the benefit of Secured Party as follows:
4.01 COVENANTS CONTAINED IN OTHER CREDIT DOCUMENTS. All of the
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covenants of Debtors and conditions of lending set forth in any other credit
documents (including, without limitation, the Commitment Letter) or security
instruments pertaining to or securing the Note are
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incorporated herein by reference and are made a part hereof as set forth in
full, and are made again by Debtors herein with Secured Party and shall be
performed and observed by Debtors at all times hereafter under this Agreement.
4.02 FURTHER ASSURANCES. Debtors will, at their expense, do, execute,
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acknowledge and deliver all and every further acts, conveyances, transfers and
assurances necessary or proper for the creation and/or perfection of the lien
and security interests being herein provided for in the Collateral, whether now
owned or hereafter acquired.
4.03 PRESERVATION OF COLLATERAL. Debtors will take any actions
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necessary to preserve the Collateral in its condition as of the date hereof and
will not sell, exchange, lease or pledge any of the Collateral or consent to the
creation of or existence of any security interest or other lien (other than the
security interests and the liens created by this Agreement upon the right, tide
and interest of any Debtor in, to and under the Collateral or any pan thereof,
and will, at their own expense, warrant and defend the title to the Collateral
against all claims and demands of any other persons to the Collateral.
4.04 INSURANCE. Debtors will immediately, at their expense, insure
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(continue to insure) the Collateral with a reputable insurance company
acceptable to Secured Party against loss or damage by fire, hazards including
within the term "extended coverage," theft and such other risk as Secured Party
may designate for an amount not less than the amount of the Note, or the full
insurable value of such Collateral, whichever is less, and Debtors will keep the
Collateral insured continuously until the Note is paid in full and satisfied,
with loss payable clause in favor of Secured Party as its interest may appear,
and Debtors will deliver the policies of insurance to Secured Party, or furnish
other proof of such insurance satisfactory to Secured Party. In case of loss,
Secured Party shall be entitled to receipt for insurance proceeds (and the
issuer of such policy or policies is hereby authorized and directed by Debtors
to make all payments thereunder directly to Secured Party); provided, however,
that for so long as Debtors are not in default hereunder, or under any other
document pertaining to or securing the Note, Secured Party will permit the
application of the insurance proceeds to the repair and replacement of the
Collateral after receiving proof satisfactory to Secured Party of such repair or
replacement. In case of loss, and should Debtors then be in default hereunder,
or under the Commitment Letter, or under any other credit document or security
instrument pertaining to or securing the Note, Secured Party may retain from
such insurance proceeds an amount equal to the unpaid balance of the Note. If
Debtors default in any of its obligations under this Article, Secured Party may,
at its option, place and pay for such insurance and the amount paid by Secured
Party, with interest thereon, shall be an additional obligation of Debtors
hereunder and under the Note.
4.05 TAXES. Debtors shall pay promptly, when due, all taxes and
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assessments upon the Collateral or for its use or operation or upon this
Agreement.
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4.06 PLACE OF BUSINESS. Each Debtor will promptly notify Secured Party
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of any change in the location of its principal place of business or chief
executive office and of the establishment (and location) of any new place of
business.
4.07 INSPECTION. Secured Party shall at all times have free access to
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and the right of inspection of any part or all of the Collateral and any records
of Debtors (and the right to make extracts from such records) and Debtors shall
deliver to Secured Party the originals or true copies of such papers and
instruments relating to any or all of the Collateral as Secured Party may
request at any time.
4.08 RECORDATION AND FILING. Debtors will cause this Agreement and all
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supplements or amendments thereto, and/or all financing and continuation
statements and similar notices required by applicable law, at all times to be
kept recorded and filed at its own expense in such manner and in such places as
maybe requested by Secured Party in order to fully preserve and protect the
rights of Secured Party hereunder, and will at their own expense furnish to
Secured Party promptly after the execution and delivery of this Agreement and
any supplement or amendment thereto an opinion of counsel stating that in the
opinion of such counsel this Agreement or such supplement or amendment, and/or
all financing and continuation statements and similar notices required by
applicable law, as the case may be, have been properly recorded or filed for
record so as to make effective of record, and to perfect, the lien and security
interest intended to be created hereby. Without limiting the foregoing, Debtors
hereby authorize Secured Party to file a financing statement and continuation
statement in the office of each public official deemed necessary or appropriate
by Secured Party or Secured Party's counsel to perfect or continue the security
interest(s) herein granted.
4.09 OTHER INDEBTEDNESS; FUTURE ADVANCES. In addition to securing the
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Note, the security interest(s) granted hereby, notwithstanding anything to the
contrary which may be herein otherwise contained, also secures payment of any
and all extensions, renewals and modifications of the Note, and any and all
other indebtedness of Debtors to Secured Party, whether now existing or
hereafter incurred.
4.10 AFTER-ACQUIRED PROPERTY. Any and all property described or
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referred to in the granting clauses hereof which is hereafter acquired shall,
without any further conveyance, assignment or act on the part of any Debtor or
Secured Party, become and be subject to the lien and security interest herein
granted as fully and completely as though specifically described herein.
4.11 FINANCIAL STATEMENTS. As soon as available, and in any event
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within 90 days after the close of each fiscal year of each Debtor, each Debtor
will provide Secured Party with copies of the consolidated and consolidating
balance sheets of such Debtor as of the close of such fiscal year and the
respective statements of income, retained earnings, cash flow and changes in
financial
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position of each Debtor for such fiscal year. In addition, as soon as available,
and in any event within 20 days after the end of each fiscal year quarter, each
Debtor will provide Secured Party with copies of the consolidated and
consolidating balance sheets of such Debtor as of the end of such financial
quarter, and statements of income and retained earnings and changes in financial
position of each Debtor for such financial quarter, all in reasonable detail,
and certified by the chief financial officer of each Debtor as being true and
correct; provided, if the fact that any Debtor is a publicly traded company
would, pursuant to applicable SEC rule or regulation or other applicable
governmental authority rule or regulation, prevent it from delivering all or a
portion of such financial information within the stated time period, such Debtor
shall have an additional period of time within which to submit such information
in order to comply with any applicable SEC or other governmental rule or
regulation.
4.12 PRESERVATION OF EXISTENCE AND CONDUCT OF BUSINESS. Each Debtor will do
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or cause to be done all things necessary to preserve and keep in full force and
effect all patents and all other licenses or rights necessary to comply with all
laws, regulations, rules, statutes or other provisions applicable to each Debtor
in the operation of its respective business.
SECTION 5. POWER OF ATTORNEY.
Each Debtor does hereby irrevocably constitute and appoint Secured Party
its true and lawful attorney with an interest and full power of substitution,
for it and in its name, place and stead to: (i) ask, collect, receive and
receipt for any and all income (and other sums which are assigned under the
granting clauses hereof) and to endorse the name of such Debtor on all
commercial paper given in payment or in part payment thereof; and (ii) without
limiting the provisions of the foregoing clause (i) hereof, to make all waivers
and agreements, to give and receive duplicate copies of all notices and other
instruments or communications which such Debtor is or may be entitled to under
any documents constituting the Collateral, and to sue for, to settle, adjust or
compromise any claim for any and all such income and other sums which were
assigned under the granting clauses hereof as fully as such Debtor could itself
do, and in its discretion to file any claim, and take any other action or
proceedings, either in its own name, or in the name of such Debtor or otherwise,
which Secured Party may deem necessary or appropriate to protect and preserve
the right, title and interest of Secured Party in and to such other sums and the
security intended to be afforded hereby, it being the intention and purpose of
the parties hereto that the assignment and transfer to Secured Party of said
rights, powers and privileges shall be effective and operative immediately and
shall continue in full force and effect at all times during the period from and
after the date of this Agreement until the Note has been fully paid and
discharged; provided specifically, however, said rights, powers and privileges
shall not be exercised by Secured Party unless an Event of Default shall have
occurred under the Commitment Letter or any other credit document or security
instrument.
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SECTION 6. DEFAULTS AND REMEDIES.
6.01 EVENTS OF DEFAULT. Any of the following occurrences or acts shall
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constitute an "EVENT OF DEFAULT" under this Agreement:
(a) Default in the payment of any installment of principal of or
interest on the Note within ten (10) days of its due date; or
(b) Default on the part of Debtor in the due observance or
performance of any covenant or agreement to be observed or performed by it under
this Agreement or the Commitment Letter, and any such default shall continue
unremedied for thirty (30) days (or such shorter period as may be specified in
the Commitment Letter) after written notice (if same is required by the
Commitment Letter) from Secured Party to Debtor specifying the default and
demanding the same to be remedied; or
(c) If any fact or warranty made in this Agreement or in any other
instrument or document delivered hereunder or in connection herewith should
prove to be untrue in any material respect, as of the date made, and such
default continues for thirty (30) days after written notice thereof to Debtors
by Secured Party; or
(d) Default by Debtors in the performance or observance of any
other covenant, term or agreement contained herein and such default continues
for thirty (30) days after written notice thereof to Debtors by Secured Party;
or
(e) Occurrence of any event or condition which constitutes, or
upon the lapse of time or the giving of notice, or both, would constitute, a
default or event of default under the Security Agreement or any other security
instrument or other instrument or document delivered by Debtors to Secured Party
at any time, or any other default by Debtors in the performance or observance of
any covenant, term or agreement contained in any such instrument or document and
such occurrence continues beyond the period of time granted by said security
instrument for curing said default; or
(f) Occurrence of any event or condition which constitutes, or
upon the lapse of time or the giving of notice, or both, would constitute, a
default or an event of default under any other agreement or evidence of
indebtedness relating to any obligation of Debtors for borrowed money, or
failure by Debtors to pay under any obligation for borrowed money to which it is
a party or which purports to be binding upon any of them and the occurrence
continues for ten (10) days after written notice thereof to Debtors by Secured
Party. Nothing herein shall prohibit any Debtor from contesting, in good faith,
any third party claim of a default; or
(g) Adjudication by a court of competent jurisdiction that any
Debtor is bankrupt or insolvent or the appointment of a receiver for any Debtor
or for all or any part of its properties;
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(h) Filing by any Debtor or by any of its creditors of a petition
under the provisions of the United States Bankruptcy Code as now enacted or
hereafter amended;
(i) Making by any Debtor of a general assignment for the benefit of
creditors or an admission in writing by any Debtor of inability to pay
indebtedness; or
(j) Any merger or consolidation of Debtor OnSite Technology L.L.C. or
any direct or indirect sale, transfer or disposition of the membership units of
Debtor OnSite Technology L.L.C.; or
(k) The dissolution or termination of the existence of any Debtor; or
(1) There should occur a material adverse change in the financial
condition of any Debtor; or
(m) Any other Event of Default under the Commitment Letter, this
Agreement or any other credit document or security instrument pertaining to or
securing the Note.
6.02 SECURED PARTY'S RIGHTS. Debtors agree that when any Event of Default
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has occurred, Secured Party shall, without limitation of all other rights and
remedies available at law or in equity, have the rights, options, duties and
remedies of a secured party, and Debtors shall have the rights and duties of a
debtor, under the Uniform Commercial Code as adopted by the State of Texas, and
without limiting the foregoing, may exercise any one or more or all, and in any
order, of the remedies set forth herein, it being expressly understood that no
remedy or remedies shall be exclusive; but each and every remedy shall be
cumulative and shall be in addition to every other remedy given herein or now or
hereafter existing at law or in equity or by statute.
(a) Secured Party may, by notice in writing to Debtors, declare
the entire unpaid balance of the Note to be immediately due and payable and
thereupon all such unpaid balance, together with all accrued interest thereon,
shall be and become immediately due and payable.
(b) Secured Party personally, or by agents or attorneys, shall
have the right (subject to compliance with any applicable mandatory legal or
regulatory requirements) to use, manage and control the Collateral and collect
and receive all earnings, revenues, rents, issues, proceeds and income of the
Collateral and every part thereof and may otherwise exercise any and all of the
rights and powers of Debtors in respect thereof.
(c) Secured Party may, if at any time such action may be lawful
and always subject to compliance with any mandatory legal or regulatory
requirements, either with or without taking possession and either before or
after taking possession, and without instituting any legal
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proceedings whatsoever, and having first given notice of such sale by registered
mail to Debtors at least ten (10) days prior to the date of such sale, and any
other notice which maybe required by law, sell and dispose of said Collateral,
or any part thereof, or interest therein, at public auction to the highest
bidder, either for cash or on credit and on such terms as Secured Party may
determine, and at any place (whether or not it be the location of the Collateral
or any part thereof) designated in the notice referred to. Any such sale or
sales maybe adjourned from time to time by announcement at the time and place
appointed for such sale or sales, or for any such adjourned sale or sales,
without further notice, and Secured Party may bid and become the purchaser at
any such sale.
(d) Secured Party may proceed to protect and enforce this
Agreement and/or the Note by suit or suits or proceedings in equity, at law or
in bankruptcy, and whether for the specific performance of any covenant or
agreement herein contained or in execution or aid of any power herein granted,
or for foreclosure here under, or for the appointment of a receiver or receivers
for the Collateral or any part thereof, or for the recovery of judgment for the
loan evidenced by the Note or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.
Nothing contained in this Section shall negate the arbitration
provisions set out in the Commitment Letter.
6.03 ACCELERATION CLAUSE. In case of any sale or assignment of the
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Collateral, or of any part thereof, by any Debtor or pursuant to any judgment or
decree of any court or otherwise in connection with the enforcement of any of
the terms of this Agreement, the principal of the Note, if not previously due,
and the interest accrued thereon and all other sums required to be paid by
Debtors pursuant to this Agreement, shall at once become and be immediately due
and payable.
6.04 EFFECT OF SALE. Any sale, whether under any power of sale hereby
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given or by virtue of judicial proceedings, shall operate to divest all right,
title, interest, claim and demand whatsoever, either at law or in equity, of
Debtors in and to the property sold and shall be a perpetual bar, both at law
and in equity, against Debtors, their respective successors and assigns, and
against any and all persons claiming the property sold or any part thereof
under, by or through Debtors, their respective successors or assigns.
6.05 APPLICATION OF SALE AND OTHER PROCEEDS. The purchase money
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proceeds and/or avails of any sale of the Collateral, or any part thereof, and
the proceeds and the avails of any remedy hereunder shall be paid to and applied
as follows:
First, to the payment of costs and expenses of foreclosure or suit, if
any, and of such sale, and of all proper expenses, liabilities and
advances, including legal expenses and attorneys' fees, incurred or made
hereunder by Secured Party and of all taxes, assessments or liens superior
to the lien of these presents, except any taxes, assessments or other
superior liens subject to which said sale may have been made;
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Second, to the payment of the whole amount then due, owing and
unpaid upon the Note for principal, interest and premium, if any;
Third, to the payment of any other Note that remain unpaid; and
Fourth, to the payment of the surplus, if any, to Debtor OnSite
Technology L.L.C., its successors and assigns, or to whomsoever may be
lawfully entitled to receive the same.
6.06 DISCONTINUANCE OF REMEDIES. In case Secured Party shall have
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proceeded to enforce any right under this Agreement by foreclosure, sale, entry
or otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely, then and in every such case
Debtors and Secured Party shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the lien and security
interest created under this Agreement.
6.07 CUMULATIVE REMEDIES. No delay or omission of Secured Party to
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exercise any right or power arising from any default shall exhaust or impair any
such right or power or prevent its exercise during the continuance of such
default. No waiver by Secured Party of any such default, whether such waiver be
full or partial, shall extend to or be taken to affect any subsequent default,
or to impair the rights resulting therefrom except as maybe otherwise provided
therein. No remedy hereunder is intended to be exclusive of any other remedy but
each and every remedy shall be cumulative and in addition to any and every other
remedy given hereunder or under the Commitment Letter or otherwise existing; nor
shall the giving, taking or enforcement of any other or additional security,
collateral or guaranty for the payment of the Note operate to prejudice, waive
or affect the security of this Agreement or any rights, powers or remedies
hereunder, nor shall Secured Party be required to first look to, enforce or
exhaust such other or additional security, collateral or guaranties.
SECTION 7. SUPPLEMENTAL AGREEMENTS.
Debtors and Secured Party from time to time and at any time, subject to the
restrictions set forth in this Agreement, shall enter into an agreement or
agreements supplemental hereto, as Secured Party may request, which thereafter
shall form a part hereof for any one or more or all of the following purposes:
(a) to execute any additional documents in connection with Secured
Party's perfection and/or continuance of the security interest herein
granted, including, but not limited to, any documents which Secured Party
shall deem necessary for the recording of its security interest in any of
the Collateral;
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(b) to subject to the lien of this Agreement additional property
hereafter acquired by Debtors and intended to be subjected to the lien of
this Agreement and to correct and amplify the description of any property
subject to the lien of this Agreement.
(c) for any other purpose not inconsistent with the terms of this
Agreement, or to cure any ambiguity or cure, correct or supplement any
defect or inconsistent provisions of this Agreement or any supplement; and
Debtors covenant to perform all requirements of any such supplemental agreement.
No restriction or obligation imposed upon Debtor may, except as otherwise
provided in this Agreement, be waived or modified by such supplemental
agreements, or otherwise.
SECTION 8. MISCELLANEOUS.
8.01 SUCCESSORS AND ASSIGNS. Whenever any of the parties hereto is
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referred to, such reference shall be deemed to include the successors and
assigns of such party; and all of the representations, warranties, covenants and
agreements in this Agreement contained by or on behalf of Debtor or by or on
behalf of Secured Party shall be binding upon and inure to the benefit of the
respective successors and assigns of such parties whether so expressed or not.
8.02 COMMUNICATIONS. All communications provided for herein shall be in
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writing. Communications to Debtors or Secured Party shall be deemed to have been
given (unless otherwise required by the specific provisions hereof in respect of
any matter) when addressed and delivered as follows:
If to Debtors: OnSite Technology L.L.C.
2600 South Loop West, Suite 645
Houston, Texas 77054
Attention: James S. Percell
Facsimile: (713) 641-0756
Environmental Safeguards, Inc.
2600 South Loop West, Suite 645
Houston, Texas 77054
Attention: James S. Percell
Facsimile: (713) 641-0756
SECURITY AGREEMENT
Page 13
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National Fuel & Energy, Inc
2600 South Loop West, Suite 645
Houston, Texas 77054
Attention: James S. Percell
Facsimile: (713) 641-0756
If to Secured Party: Rineco Recycling, LLC
c/o Harry C. Erwin, III
P.O. Box 24855
Little Rock, Arkansas 72221
Facsimile: (501) 868-7750
with a copy to: Rineco Recycling, LLC
P.O. Box 2800
Benton, Arkansas 72018-2800
Attention: Steven M. Keith
Facsimile: (501) 778-8897
or to Debtors or Secured Party at such other address as any Debtors or Secured
Party may designate by notice duly given in accordance with this Section to the
other party.
8.03 RELEASE. Secured Party shall release this Agreement and the lien
-------
and security interest granted hereby by proper instrument or instruments upon
presentation of satisfactory evidence that the Note has been fully paid or
discharged.
8.04 COUNTERPARTS. This Agreement may be executed, acknowledged and
------------
delivered in any number of counterparts, each of such counterparts constituting
an original but all together only one agreement.
8.05 GOVERNING LAW. This Agreement shall be construed in accordance
--------------
with and governed by the substantive laws of the State of Texas and any
applicable federal laws; provided, nothing herein shall affect the parties'
designation in the Note that the laws of the State of Texas shall govern as to
all matters relating to the maximum amount of interest which may be charged
thereon.
8.06 JURISDICTION AND VENUE. With respect to any claim arising out of
----------------------
this Agreement, each party irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of Arkansas, and the United States District Court
located in the City of Little Rock, Pulaski County, Arkansas, and each party
hereby also irrevocably waives any objection which it may have at anytime to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement
SECURITY AGREEMENT
Page 14
- -------------------
brought in any such court. Each party hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum, and irrevocably waives the right to
object, with respect to such claim, suit, action or proceeding brought in any
such court, that such court does not have jurisdiction over such party.
8.07 CAPTIONS. Captions used in this Agreement are for convenience only
--------
and shall not be construed in interpreting this Agreement. Whenever the context
shall require, the masculine shall include the feminine and neuter, and the
singular shall include the plural, and conversely. If any portion of this
Agreement shall be held invalid or inoperative, then, so far as is reasonable
and possible, the remainder of this Agreement shall be considered valid and
operative and effect shall be given to the intent manifested by the portion,
held invalid or inoperative.
8.08 INCORPORATION OF RECITALS AND EXHIBIT(S). All of the preambles and
----------------------------------------
all of the recitals set forth in this Agreement are made a part of this
Agreement. In addition, any and all exhibits to this Agreement are hereby
specifically made a part of and incorporated into this Agreement.
8.09 COORDINATION WITH OTHER LOAN DOCUMENTS. The benefits, rights and
--------------------------------------
remedies of Secured Party contained herein or in the Commitment Letter or
provided for in any of the other loan documents executed in connection herewith
are, as provided in Section 6.07 above, cumulative. To the extent of any
conflict between any provision of this Agreement and any provision contained in
any of the other loan documents executed in connection herewith, the provisions
of this Agreement shall control, except that any provision of any other document
giving the greater security or additional rights and remedies to Lender shall
control over this Agreement.
DEBTORS:
ONSITE TECHNOLOGY L.L.C.,
an Oklahoma limited liability company
By: /s/ James S. Percell
--------------------------------------
Name: James S. Percell
Title: President
SECURITY AGREEMENT
PAGE 15
- -------------------
ENVIRONMENTAL SAFEGUARDS, INC.,
a Nevada corporation
BY: /s/ James S. Percell
----------------------------------------
NAME: James S. Percell
TITLE: President
NATIONAL FUEL & ENERGY, INC.,
a Wyoming corporation
BY: /s/ James S. Percell
----------------------------------------
Name: James S. Percell
Title: President
SECURED PARTY:
RINECO RECYLCING, LLC,
an Arkansas limited liability company
By its Manager:
RINECO CHEMICAL INDUSTRIES, INC.,
an Arkansas corporation
By: /s/ Michael L. Spinks
----------------------------------------
Name: Michael L. Spinks
--------------------------------------
Title: V.P. of Admin, CFO
-------------------------------------
SECURITY AGREEMENT
Page 16
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ACKNOWLEDGMENTS
---------------
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
ON THIS DAY before me, the undersigned Notary Public, personally appeared
the within named JAMES S. PERCELL, to me personally well known, who acknowledged
himself to be the President of ONSITE TECHNOLOGY L.L.C., an Oklahoma limited
liability company, and further stated that he, in such capacity, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained, by signing the name of said limited liability company as its
President.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 20th
----
day of March, 2003
[GRAPHIC OMITTED] /s/ Tanya McGinnis
----------------------------------------
TANYA McGINNIS NOTARY PUBLIC
Notary Public, State of Texas My Commission Expires: 8/10/06
----------
My Commission Expires 8/10/2006
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
On this 20th day before me, the undersigned Notary Public, personally
----
appeared the within named JAMES S. PERCELL, to me personally well known, who
acknowledged himself to be the President of ENVIRONMENTAL SAFEGUARDS, INC., a
Nevada corporation, and that he was duly authorized in said capacity to execute
the foregoing instrument for and in the name and behalf of said corporation, and
further stated and acknowledged that he had so signed, executed and delivered
said foregoing instrument for the consideration, uses and purposes therein set
forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal.
[GRAPHIC OMITTED] /s/ Tanya McGinnis
---------------------------------------
TANYA McGINNIS NOTARY PUBLIC
Notary Public, State of Texas My Commission Expires: 8/10/06
----------
My Commission Expires 8/10/2006
SECURITY AGREEMENT
Page 17
- -------------------
ACKNOWLEDGMENTS
---------------
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
On this 20th day of March, 2003 before me, the undersigned Notary Public,
----
personally appeared the within named JAMES S. PERCELL, to me personally well
known, who acknowledged himself to be the President of NATIONAL FUEL & ENERGY,
INC., an Wyoming corporation, and that he was duly authorized in said capacity
to execute the foregoing instrument for and in the name and behalf of said
corporation, and further stated and acknowledged that he had so signed, executed
and delivered said foregoing instrument for the consideration, uses and purposes
therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
[GRAPHIC OMITTED] /s/ Tanya McGinnis
--------------------------------------
TANYA McGINNIS NOTARY PUBLIC
Notary Public, State of Texas My Commission Expires: 8/10/06
----------
My Commission Expires 8/10/2006
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
ON THIS DAY before me, the undersigned Notary Public, personally appeared
the within named Michael Spinks, Jr., to me personally well known, who
----------------------
acknowledged himself to be the VP of Admin and CFO of RINECO RECYCLING, LLC, an
-------------------
Arkansas corporation, and who stated that said corporation is the Manager of
RINECO RECYCLING, LLC, an Arkansas limited liability company, and further stated
that he, in such capacity, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of said
limited liability company as such Manager.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 20th
----
day of March, 2003.
[GRAPHIC OMITTED] /s/ Tanya McGinnis
-------------------------------------
TANYA McGINNIS NOTARY PUBLIC
Notary Public, State of Texas My Commission Expires: 8/10/06
----------
My Commission Expires 8/10/2006