EXHIBIT 10.43
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SECURITY AGREEMENT
dated as of November 20, 1998
between
PRIVATE LABEL ENERGY SERVICES, INC.,
as Debtor
and
NATIONSBANK, N.A.,
as Agent
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1565253
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of November 20, 1998 (as
amended, supplemented or modified from time to time, the "Security Agreement"),
is made by PRIVATE LABEL ENERGY SERVICES, INC., a Delaware corporation (the
"Debtor"), and NATIONSBANK, N.A., a national banking association (the "Agent")
in its capacity as Agent for the lenders (the "Lenders") from time to time a
party to the Revolving Credit Agreement, dated as of November 20, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Revolving
Credit Agreement"), by and among the Hagler Bailly, Inc., a Delaware corporation
(the "Company"), the Agent, in its capacity as such thereunder, and the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Revolving Credit Agreement, the
Lenders have severally agreed to make available to the Company a revolving line
of credit for Revolving Loans, Swing Line Loans and Standby Letters of Credit in
an aggregate principal amount at any time not to exceed the Maximum Available
Amount, subject to the terms and conditions contained therein;
WHEREAS, the Company owns, directly or indirectly, [all] of
the issued and outstanding shares of capital of stock of, or other equity
interests in, the Debtor;
WHEREAS, the proceeds of such Revolving Loans, Swing Line
Loans and Standby Letters of Credit may be used to enable the Company to make
valuable transfers to the Debtor in connection with the operation of its
business and for the Permitted Uses;
WHEREAS, the Debtor will derive substantial direct and
indirect benefit from such Revolving Loans, Swing Line Loans and Standby Letters
of Credit; and
WHEREAS, the Company is required to cause the Debtor to
execute this Agreement pursuant to the provisions of the Revolving Credit
Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and to induce the Lenders to make or maintain
their respective Revolving Loans and Swing Line Loans to, and the Issuing Lender
to issue or maintain the Standby Letters of Credit under the Revolving Credit
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Debtor hereby agrees with the
Agent, for the ratable benefit of the Lenders, as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions Generally. Capitalized terms used herein without
definition shall have the respective meanings specified in the Revolving Credit
Agreement, and the following terms shall have the following meanings (such
meanings to be, when appropriate, equally applicable to both the singular and
plural forms of the terms defined):
"Account Debtor" shall mean, with respect to any Receivable or
Other Intangible, any Person obligated to make payment thereunder, including
without limitation any account debtor thereon.
"Assignment of Claims Act" shall mean the Assignment of Claims Act of
1940, 31 U.S.C. 3727, 41 U.S.C. 15 (1986), as the same
may be amended and any successor statute of similar import.
"Assignment of Federal Contract" shall have the meaning
specified in Section 4.21 hereof.
"Cash Collateral Account" shall have the meaning specified in
Section 2.4 hereof.
"Collateral" shall have the meaning set forth in Section 2.1.
"Debtor" shall have the meaning specified in the preamble hereof.
"Equipment" shall mean all equipment now owned or hereafter
acquired by the Debtor, including all items of machinery, equipment, furnishings
and fixtures of every kind, whether affixed to real property or not, as well as
all automobiles, trucks and vehicles of every description, trailers, handling
and delivery equipment, fittings, special tools, all additions to, substitutions
for, replacements of or accessions to any of the foregoing, all attachments,
components, parts (including spare parts) and accessories whether installed
thereon or affixed thereto and all fuel for any thereof.
"Federal Contract" means any contract or agreement with,
involving or for the benefit of the United States of America or any department,
agency or instrumentality thereof (collectively, the "U.S. Government"), whether
now existing or hereafter arising, in each case as the same may be amended,
modified or otherwise supplemented from time to time.
"Inventory" shall mean all inventory now owned or hereafter
acquired by the Debtor, including (i) all goods and other personal property
which are held for sale or lease or are furnished or are to be furnished under a
contract of service or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in the Debtor's business,
(ii) all inventory, wherever located, evidenced by negotiable and non-negotiable
documents of title, warehouse receipts and bills of lading, (iii) all of the
Debtor's rights in, to and under all purchase orders now owned or hereafter
received or acquired by it for goods or services and (iv) all rights of the
Debtor as an unpaid seller, including rescission, replevin, reclamation and
stopping in transit.
"Lenders" shall have the meaning specified in the preamble hereof.
"Obligations" shall mean any and all now existing or hereafter
arising indebtedness, obligations, liabilities and covenants of each Credit
Party to any Lender, the Agent, their respective Affiliates, successors and
assigns and any other Indemnified Person under or arising out of any Credit
Document, including without limitation (i) all Revolving Loans and all Swing
Line Loans together with interest thereon and all Standby Letters of Credit,
(ii) all fees, expenses, indemnity payments and other amounts due or to become
due under the Revolving Credit Agreement, the Revolving Notes, the Swing Line
Note or any other Credit Document, (iii) all liabilities and obligations under
the Subsidiary Guarantee and any other agreement executed by any Credit Party
guarantying the obligations of the Borrower under the Revolving Credit Agreement
or any other Credit Document, (iv) all liabilities and obligations under any
agreement providing collateral for any of the foregoing (including any Pledge
Agreement and the Subsidiary Security Agreements), and (v) and any agreement or
instrument refinancing or restructuring all or any portion of the obligations
and liabilities under any of foregoing or under any successor agreement or note,
in each case whether direct or indirect, absolute or contingent or due or to
become due.
"Other Intangibles" shall mean all accounts, accounts
receivable, contract rights, documents, instruments, notes, chattel paper,
money, indemnities, warranties and general intangibles now owned or hereafter
acquired by the Debtor including, without limitation, all goodwill, customer
lists, permits, federal and state tax refunds, reversionary interests in pension
plan assets, Patents, Trademarks, licenses, copyrights and other rights in
intellectual property, other than Receivables.
"Patents" shall mean all letters patent of the United States
or any other country, and all applications for letters patent of the United
States or any other country, in which the Debtor may now or hereafter have any
right, title or interest and all reissues, continuations, continuations-in-part
or extensions thereof.
"Proceeds" shall mean all proceeds, including (i) whatever is
received upon any collection, exchange, sale or other disposition of any of the
Collateral and any property into which any of the Collateral is converted,
whether cash or non-cash, (ii) any and all payments or other property (in any
form whatsoever) made or due and payable on account of any insurance, indemnity,
warranty or guaranty payable to the Debtor with respect to any of the
Collateral, (iii) any and all payments (in any form whatsoever) made or due and
payable in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person, corporation, agency, authority or
other entity acting under color of any governmental authority) and (iv) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Receivables" shall mean all accounts now or hereafter owing
to the Debtor, and all accounts receivable, contract rights, documents,
instruments or chattel paper representing amounts payable or monies due or to
become due to the Debtor, arising from the sale of Inventory or the rendition of
services in the ordinary course of business or otherwise (whether or not earned
by performance), together with all Inventory returned by or reclaimed from
customers wherever such Inventory is located, and all guaranties, securities and
liens held for the payment of any such account, account receivable, contract
right, document, instrument or chattel paper.
"Security Agreement" shall have the meaning specified in the preamble
hereof.
"Trademarks" shall mean all right, title or interest which the
Debtor may now or hereafter have in any or all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other source of business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof and all applications in
connection therewith, including without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or political subdivision thereof and all reissues, extensions or
renewals thereof.
"UCC" shall mean the Uniform Commercial Code in effect on the
date hereof in the Commonwealth of Virginia.
"U.S. Government" has the meaning specified in the definition of
Federal Contract contained herein.
Section 1.02. UCC Definitions. The uncapitalized terms "account", "account
debtor", "chattel paper", "contract right", "document", "warehouse receipt",
"bill of lading", "document of title", "instrument", "inventory", "general
intangible", "money", "security", "certificated security", "uncertificated
security", "financial asset" and "proceeds" as used in Section 1.1 or elsewhere
in this Security Agreement shall have the respective meanings set forth in the
UCC.
ARTICLE II.
SECURITY INTERESTS
Section 2.01. Grant of Security Interests. To secure the due and punctual
payment of all Obligations, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing or due or
to become due, whether at maturity or upon acceleration or otherwise, in
accordance with the terms thereof and to secure the due and punctual performance
of all of the Obligations and in order to induce the Agent and the Lenders to
enter into the Revolving Credit Agreement and the other Credit Documents, the
Debtor hereby pledges, assigns, delivers, conveys and transfers to the Agent,
for the ratable benefit of the Lenders, and grants to the Agent, for the ratable
benefit of the Lenders, a first priority and continuing security interest in and
lien on, all of the Debtor's right, title and interest in, to and under the
following, whether now existing or hereafter acquired (the "Collateral"):
(i) all Receivables;
(ii) all Other Intangibles;
(iii) all Equipment;
(iv) all Inventory;
(v) to the extent not included in the foregoing, all securities (whether
certificated or uncertificated) and all financial assets, whether now existing
or hereafter arising, including, without limitation, all capital stock issued by
any Person and held by Debtor, and all partnership interests, whether in the
nature of a joint venture, limited liability company member's interest, master
limited partnership, teaming arrangement or otherwise;
(vi) to the extent not included in the foregoing, all other personal property,
whether tangible or intangible, and wherever located whether within or outside
of the United States, including, but not limited to, the balance of every
deposit account now or hereafter existing of the Debtor with any bank or other
financial institution and all monies of the Debtor and all rights to payment of
money of the Debtor;
(vii) to the extent not included in the foregoing, all books, ledgers and
records and all computer programs, tapes, discs, punch cards, data processing
software, transaction files, master files and related property and rights
(including computer and peripheral equipment) necessary or helpful in enforcing,
identifying or establishing any item of Collateral; and
(viii) to the extent not otherwise included, all Proceeds and products of any or
all of the foregoing, whether existing on the date hereof or arising hereafter;
provided, however, notwithstanding anything to the contrary contained herein,
the Debtor is not assigning, pledging or otherwise encumbering under this
Security Agreement its interests in any Federal Contract to which it is a party,
or in accounts or receivables due to Debtor under such Federal Contract, to the
extent, but only to the extent, such assignment, pledge or other encumbrance
would breach or violate or would cause Debtor to breach or violate such Federal
Contract or statutes or regulations applicable thereto, it being understood that
this proviso does not apply to, or in any way limit, Debtor's assignment, pledge
or encumbrance of Proceeds of all Federal Contracts to which it is a party.
Section 2.02. Continuing Liability of the Debtor. Anything herein to the
contrary notwithstanding, the Debtor shall remain liable to observe and perform
all the terms and conditions to be observed and performed by it under any
contract, agreement, warranty or other obligation with respect to the
Collateral; and shall do nothing to impair the security interests herein
granted. The Agent shall not have any obligation or liability under any such
contract, agreement, warranty or obligation by reason of or arising out of this
Security Agreement or the receipt by the Agent of any payment relating to any
Collateral, nor shall the Agent be required to perform or fulfill any of the
obligations of the Debtor with respect to the Collateral, to make any inquiry as
to the nature or sufficiency of any payment received by it or the sufficiency of
the performance of any party's obligations with respect to any Collateral.
Furthermore, the Agent shall not be required to file any claim or demand to
collect any amount due or to enforce the performance of any party's obligations
with respect to, the Collateral.
Section 2.03. Sales and Collections.
(a) Sales of Inventory in the Ordinary Course of Business. The Debtor is
authorized (i) to sell in the ordinary course of its business for fair value and
on an arm's-length basis any of its Inventory normally held by it for such
purpose and (ii) to use and consume, in the ordinary course of its business, any
raw materials, supplies and materials normally held by it for such purpose. The
Agent may, upon the occurrence of any Event of Default, without cause or notice,
curtail or terminate such authority at any time.
(b) Collection of Receivables. The Debtor is authorized to collect amounts owing
to it with respect to the Collateral, except as otherwise provided in connection
with the Assignment of Federal Contract, if any as provided herein. However, the
Agent may, upon and during the continuance of an Event of Default or a Potential
Event of Default, notify Account Debtors obligated to make payments under any or
all Receivables or Other Intangibles that the Agent has a security interest in
such Collateral and that payments shall be made directly to the Agent. Upon the
request of the Agent upon and during the continuance of an Event of Default or a
Potential Event of Default, as the case may be, the Debtor will so notify such
Account Debtors and will execute such contract assignments, notices of
assignment or other documents as may be required by such Account Debtors. The
Debtor will use all reasonable efforts to cause each Account Debtor to comply
with the foregoing instruction. In furtherance of the foregoing, the Debtor
authorizes the Agent upon and during the continuance of an Event of Default or a
Potential Event of Default (i) to ask for, demand, collect, receive and give
acquittances and receipts for any and all amounts due and to become due under
any Collateral and in the name of the Debtor or its own name or otherwise, (ii)
to take possession of, endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of monies due under any
Collateral and (iii) to file any claim or take any other action in any court of
law or equity or otherwise which it may deem appropriate for the purpose of
collecting any amounts due under any Collateral. The Agent shall have no
obligation to obtain or record any information relating to the source of such
funds or the obligations in respect of which payments have been made.
Section 2.04. Segregation of Proceeds.
(a) Cash Collateral Account Maintained by Agent. Upon an Event of Default or a
Potential Event of Default, the Agent shall have the right at any time during
the continuance thereof to cause to be opened and maintained at the office of
the Agent in McLean, Virginia a non-interest bearing bank account (the "Cash
Collateral Account") which will contain only Proceeds. Any "cash proceeds" (as
such term is defined in Section 9-306(1) of the UCC) received by the Agent
directly from Account Debtors obligated to make payments under Receivables or
Other Intangibles pursuant to Section 2.3 hereof or from the Debtor pursuant to
clause (b) of this Section 2.4, whether consisting of checks, notes, drafts,
bills of exchange, money orders, commercial paper or other Proceeds received on
account of any Collateral, shall be promptly deposited in the Cash Collateral
Account, and until so deposited shall be held in trust for the Agent as property
of the Agent and shall not be commingled with any funds of the Debtor not
constituting Proceeds of Collateral. The name in which the Cash Collateral
Account is carried shall clearly indicate that the funds deposited therein are
the property of the Debtor, subject to the security interest of the Agent
hereunder. Such Proceeds, when deposited, shall continue to be security for the
Obligations and shall not constitute payment thereof until applied as
hereinafter provided. The Agent shall have sole dominion and control over the
funds deposited in the Cash Collateral Account, and such funds may be withdrawn
therefrom only by the Agent.
(b) Deposit of Proceeds by the Debtor. Upon notice by the Agent to the Debtor
that the Cash Collateral Account has been opened, the Debtor shall cause all
cash Proceeds collected by it to be delivered to the Agent forthwith upon
receipt, in the original form in which received (with such endorsements or
assignments as may be necessary to permit collection thereof by the Agent), and
for such purpose the Debtor hereby irrevocably authorizes and empowers the
Agent, its officers, employees and authorized agents to endorse and sign the
name of the Debtor on all checks, drafts, money orders or other media of payment
so delivered, and such endorsements or assignments shall, for all purposes, be
deemed to have been made by the Debtor prior to any endorsement or assignment
thereof by the Agent. The Agent may use any convenient or customary means for
the purpose of collecting such checks, drafts, money orders or other media of
payment.
Section 2.05. Verification of Receivables. The Agent shall have the right to
make test verifications of Receivables in any reasonable manner and through any
medium that it considers advisable, and the Debtor agrees to furnish all such
assistance and information as the Agent may reasonable require in connection
therewith. The Debtor at its expense will cause its chief financial officer to
furnish to the Agent at any reasonable time and from time to time promptly upon
the Agent's reasonable request, the following reports: (i) a reconciliation of
all Receivables, (ii) an aging of all Receivables, (iii) trial balances and (iv)
a test verification of such Receivables as the Agent may request.
Section 2.06. Release of Collateral.
(a) Security Interest of Agent Ceases Upon Permitted Dispositions. The Debtor
may sell or realize upon or transfer or otherwise dispose of Collateral only to
the extent permitted by Section 4.13, and the security interests of the Agent in
such Collateral so sold, realized upon or disposed of (but not in the Proceeds
arising from such sale, realization or disposition) shall cease immediately upon
such sale, realization or disposition, without any further action on the part of
the Agent. The Agent, if requested in writing by the Debtor but at the expense
of the Debtor, is hereby authorized and instructed to deliver to the Account
Debtor or the purchaser or other transferee of any such Collateral a certificate
stating that the Agent no longer has a security interest therein, and such
Account Debtor or such purchaser or other transferee shall be entitled to rely
conclusively on such certificate for any and all purposes.
(b) Filing of Termination Statements. Upon the payment in full of all of the
Obligations and if there is no commitment by any Lender to make further
advances, incur obligations or otherwise give value, the Agent will (as soon as
reasonably practicable after receipt of notice from the Debtor requesting the
same but at the expense of the Debtor) deliver to the Debtor (i) for each
jurisdiction in which a UCC financing statement is on file to perfect the
security interests granted to the Agent hereunder, a termination statement
(appropriately completed) to the effect that the Agent no longer claims a
security interest under such financing statement, and (ii) such other documents
as the Debtor shall reasonably request evidencing satisfaction of the
Obligations and the release of the security interests granted to the Agent
hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
The Debtor represents and warrants that:
Section 3.01. Title to Collateral. Except for the security interests granted to
the Agent pursuant to this Security Agreement and as otherwise permitted by
Section 6.2(a) of the Revolving Credit Agreement, the Debtor is the sole owner
of each item of the Collateral, having good and marketable title thereto, free
and clear of any and all Liens.
Section 3.02. Validity, Perfection and Priority of Security Interests.
(a) By complying with Section 4.1 hereof, the Debtor will have created a valid
security interest in favor of the Agent in all existing Collateral and in all
identifiable Proceeds of such Collateral, which security interest (except in
respect of Collateral not located at a facility identified on Schedule 3.7
hereto and motor vehicles for which the exclusive manner of perfecting a
security interest therein is by noting such security interest in the certificate
of title in accordance with local law) would be prior to the claims of a trustee
in bankruptcy under Section 544(a) of the Bankruptcy Code. Continuing compliance
by the Debtor with the provisions of Section 4.2 hereof will also (i) create
valid security interests in all Collateral acquired after the date hereof and in
all identifiable Proceeds of such Collateral and (ii) cause such security
interests in all Collateral and in all Proceeds which are (A) identifiable cash
Proceeds of Collateral covered by financing statements required to be filed
hereunder, (B) identifiable Proceeds in which a security interest may be
perfected by such filing under the UCC and (C) any Proceeds in the Cash
Collateral Account to be duly perfected under the UCC, in each case prior to the
claims of a trustee in bankruptcy under the Bankruptcy Code (except in respect
of Collateral not located at a facility identified on Schedule 3.5 hereto).
(b) The security interests of the Agent in the Collateral located at the
facilities identified on Schedule 3.5 hereto rank first in priority. Other than
financing statements or other similar documents perfecting the security
interests in favor of the Agent, no financing statements, deeds of trust,
mortgages or similar documents covering all or any part of the Collateral are on
file or of record in any government office in any jurisdiction in which such
filing or recording would be effective to perfect a security interest in such
Collateral, nor is any of the Collateral in the possession of any Person (other
than the Debtor) asserting any claim thereto or security interest therein.
Section 3.03. Enforceability of Receivables and Other Intangibles. To the best
knowledge of the Debtor, each Receivable and Other Intangible is a valid and
binding obligation of the related Account Debtor in respect thereof, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
provisions of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and complies with any applicable legal
requirements.
Section 3.04. Place of Business. Schedule 3.4 correctly sets forth the chief
executive office and principal place of business of the Debtor and the offices
of the Debtor where records concerning Receivables and Other Intangibles are
kept.
Section 3.05. Location of Collateral. Schedule 3.5 correctly sets forth the
location of all Equipment and Inventory, other than rolling stock, aircraft and
goods in transit. Except as otherwise specified in Schedule 3.5, all Inventory
and Equipment has been located at the address specified on Schedule 3.5 at all
times during the four-month period prior to the date hereof while owned by the
Debtor. All Inventory has been and will be produced in compliance with the Fair
Labor Standards Act, 29 U.S.C. ss.ss. 201-219, except for such non-compliance
which could not reasonably be expected to have a material adverse effect on the
Debtor. No Inventory is evidenced by a negotiable document of title, warehouse
receipt or bill of lading. No non-negotiable document of title, warehouse
receipt or bill of lading has been issued to any person other than the Debtor,
and the Debtor has retained possession of all of such non-negotiable documents,
warehouse receipts and bills of lading. No amount payable under or in connection
with any of the Collateral is evidenced by promissory notes or other
instruments.
Section 3.06. Trade Names. Schedule 3.6 correctly sets forth any and all trade
names, division names, assumed names or other names under which the Debtor
currently transacts business or has transacted business within the four-month
period prior to the date hereof.
Section 3.07. Patents and Trademarks. Schedule 3.7 correctly sets
forth all Patents, Patent licenses, Trademarks and Trademark licenses
now owned by the Debtor.
ARTICLE IV.
COVENANTS
The Debtor covenants and agrees that until all obligations and
liabilities in respect of the Obligations shall have performed and paid in full
and until no Standby Letters of Credit are outstanding or fully cash
collateralized and the Commitments are terminated:
Section 4.01. Perfection of Security Interests. The Debtor will, at its expense,
cause all filings and recordings and other actions specified on Schedule 4.1 to
have been completed on or prior to the Effective Date.
Section 4.02. Further Actions.
(a) At all times after the date hereof, the Debtor will, at its expense, comply
with the following:
(i) as to all Receivables, Other Intangibles, Equipment and Inventory, it will
cause UCC financing statements and continuation statements to be filed and to be
on file in all applicable jurisdictions as required to perfect the security
interests granted to the Agent hereunder, to the extent that applicable law
permits perfection of a security interest by filing under the UCC;
(ii) as to all Proceeds, it will cause all UCC financing statements and
continuation statements filed in accordance with clause (i) above to include a
statement or a checked box indicating that Proceeds of all items of Collateral
described herein are covered;
(iii) as to any amount payable under or in connection with any of the Collateral
which shall be or shall become evidenced by any promissory note or other
instrument, the Debtor will promptly (but in no event later than ten (10)
Business Days after receipt of such note or instrument), pledge and deliver such
note or other instrument to the Agent as part of the Collateral, duly endorsed
in a manner reasonably satisfactory to the Agent;
(iv) at the request of the Agent, the Debtor shall deliver all other Collateral
consisting of certificated securities, endorsed for transfer in a manner
reasonably satisfactory to the Agent (or execute a securities intermediary
account control agreement to the extent possession by the Agent of such
securities is not feasible); and
(v) as to all Patents, Patent licenses, Trademarks or Trademark licenses, the
Debtor will effect the recordation or renewal of the recordation of the security
interests of the Agent therein so as to maintain valid and perfected security
interests therein under all applicable state and federal laws.
(b) Further Assurances. The Debtor will, from time to time and at its expense,
execute, deliver, file or record such UCC financing statements, applications for
certificates of title and such other statements, assignments, instruments,
documents, agreements or other papers and take any other action that may be
necessary or desirable, or that the Agent may reasonably request, in order to
create, preserve, perfect, confirm or validate the security interest of the
Agent in the Collateral, to enable the Agent to obtain the full benefits of this
Security Agreement or to enable it to exercise and enforce any of its rights,
powers and remedies hereunder, including, without limitation, its right to take
possession of the Collateral. (c) Signature. To the fullest extent permitted by
law, the Debtor authorizes the Agent to sign and file financing and continuation
statements and amendments thereto with respect to the Collateral without its
signature thereon.
Section 4.03. Change of Name, Identity or Structure. The Debtor will not change
its name, identity or corporate structure in any manner and, except as set forth
on Schedule 3.6, will not conduct its business under any trade, assumed or
fictitious name unless it shall have given the Agent at least forty-five (45)
days' prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by the Agent to amend any financing statement or continuation
statement relating to the security interests granted hereby in order to preserve
such security interests and to effectuate or maintain the priority thereof
against all Persons.
Section 4.04. Place of Business and Collateral. The Debtor will not change the
location of (i) its places of business, (ii) its chief executive office or (iii)
the office or other locations where it keeps or holds any Collateral or any
records relating thereto from the applicable location listed on Schedule 3.4 or
3.5 unless, prior to such change, it notifies the Agent forty-five (45) days in
advance of such change, makes all UCC filings required by Section 4.2 and takes
all other action necessary or that the Agent may reasonably request to preserve,
perfect, confirm and protect the security interests granted hereby. The Debtor
will in no event change the location of any Collateral if such change would
cause the security interest granted hereby in such Collateral to lapse or cease
to be perfected. The Debtor will at all times maintain its chief executive
office within one of the forty-eight contiguous states in which Article 9 of the
uniform commercial code is in effect.
Section 4.05. Fixtures. The Debtor will not permit any Equipment to become a
fixture unless it shall have given the Agent at least ten (10) days' prior
written notice thereof and shall have taken all such action and delivered or
caused to be delivered to the Agent all instruments and documents, including,
without limitation, waivers and subordination agreements by any landlords and
mortgagees, and filed all financing statements necessary or reasonably requested
by the Agent, to preserve and protect the security interest granted herein and
to effectuate or maintain the priority thereof against all Persons; provided,
however, that, so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, the Debtor shall not be obligated to
comply with the provisions of this Section 4.5 with respect to the first $50,000
of Equipment (determined based on the then fair market value thereof).
Section 4.06. Maintenance of Records. The Debtor will keep and maintain at its
own cost and expense complete books and records relating to the Collateral which
are satisfactory to the Agent including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral and all
of its other dealings with the Collateral. The Debtor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby. For the Agent' further security, the Debtor
agrees that the Agent shall have a special property interest in all of the
Debtor's books and records pertaining to the Collateral and the Debtor shall
deliver and turn over any such books and records to the Agent or to its
representatives at any time on demand of the Agent.
Section 4.07. Compliance with Laws The Debtor will comply in all material
respects with all acts, rules, regulations, orders, decrees and directions of
any government or any state or local government applicable to the Collateral or
any part thereof or to the operation of the Debtor's business except to the
extent that the failure to comply would not have a material adverse effect on
the financial or other condition of the Debtor; provided, however, that the
Debtor may contest any act, rule, regulation, order, decree or direction in any
reasonable manner which shall not, in the sole opinion of the Agent, adversely
affect the Agent's rights or, in the case of Collateral located at a facility
identified on Schedule 3.7 hereto, the first priority of its security interest
in the Collateral.
Section 4.08. Payment of Taxes. The Debtor will pay promptly when due all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of its income or profits therefrom, as well as all claims of any kind
(including claims for labor, materials and supplies), except that no such charge
need be paid if (i) the validity thereof is being contested in good faith by
appropriate proceedings and (ii) such charge is adequately reserved against in
accordance with generally accepted accounting principles, as consistently
applied.
Section 4.09. Compliance with Terms of Accounts and Contracts. The Debtor will
perform and comply in all material respects with all of its obligations under
all agreements relating to the Collateral to which it is a party or by which it
is bound.
Section 4.10. Limitation on Liens on Collateral. The Debtor will not create,
permit or suffer to exist, and will defend the Collateral and the Debtor's
rights with respect thereto against and take such other action as is necessary
to remove any Lien, security interest, encumbrance, or claim in or to the
Collateral other than the security interests created hereunder and such Liens to
the extent permitted pursuant to Section 6.2(a) of the Revolving Credit
Agreement.
Section 4.11. Limitations on Modifications of Receivables and Other Intangibles;
No Waivers or Extensions. The Debtor will not (i) amend, modify, terminate or
waive any provisions of any material Receivable or Other Intangible in any
manner which might, when taken together with all such other Receivables or Other
Intangibles, respectively, materially reduce the value of all Receivables or
Other Intangibles, respectively, in the Collateral, (ii) fail to exercise
promptly and diligently each and every material right which it may have under
each Receivable and Other Intangible or (iii) fail to deliver to the Agent a
copy of each material demand, notice or document received by it relating in any
way to any Receivable or Other Intangible.
Section 4.12. Maintenance of Insurance. The Debtor will maintain with
financially sound insurance companies licensed to do business in the
jurisdictions in which the Collateral is located insurance policies on the
Inventory and Equipment in accordance with the provisions of Section 6.1(m) of
the Revolving Credit Agreement.
Section 4.13. Limitations on Dispositions of Collateral. The Debtor will not
directly or indirectly (through the sale of stock, merger or otherwise), without
the prior written consent of the Agent, sell, transfer, lease or otherwise
dispose of any of the Collateral, or attempt, offer or contract to do so except
for (i) sales of Inventory in the ordinary course of its business for fair value
in arm's-length transactions and (ii) so long as no Event of Default (or
Potential Event of Default) has occurred and is continuing, dispositions in a
commercially reasonable manner of Equipment which has become redundant, worn out
or obsolete or which should be replaced so as to improve productivity, so long
as the proceeds of any such disposition are (x) used to acquire replacement
equipment which has comparable or better utility and equivalent or better value
and which is subject to a first priority security interest in favor of the Agent
therein, except as permitted by Section 6.2(a) of the Revolving Credit
Agreement, or (y) applied to repay the Obligations. The inclusion of Proceeds of
the Collateral under the security interests granted hereby shall not be deemed a
consent by the Agent to any sale or disposition of any Collateral other than as
permitted by this Section 4.13.
Section 4.14. Further Identification of Collateral. The Debtor will furnish to
the Agent from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request. The Debtor shall promptly notify
the Agent if the value of the Collateral located at the facilities identified on
Schedule 3.7 hereto is less than 80% of the value of all of the Collateral.
Section 4.15. Notices. The Debtor will advise the Agent promptly and in
reasonable detail (i) of any Lien, security interest, encumbrance or claim made
or asserted against any of the Collateral, other than, unless reasonably
requested by the Agent, Liens permitted by Section 6.2(a) of the Revolving
Credit Agreement, (ii) of any material change in the composition of the
Collateral, and (iii) of the occurrence of any other event which would have a
material adverse effect on the aggregate value of the Collateral or on the
security interests granted to the Agent in this Security Agreement.
Section 4.16. Change of Law. The Debtor shall promptly notify the Agent of any
change in law known to it which (i) adversely affects or will adversely affect
the validity, perfection or priority of the security interests granted hereby,
(ii) requires or will require a change in the proceedings to be followed in
order to maintain and protect such validity, perfection and priority or (iii)
could result in the Agent not having a perfected security interest in any of the
Collateral.
Section 4.17. Right of Inspection.
(a) Access to Books and Records. The Debtor shall, following any request by the
Agent and upon reasonable notice, permit the Agent or its representatives to
have full and free access during normal business hours to all the books,
correspondence and records of the Debtor, and the Agent or its representatives
may examine the same, take extracts therefrom, make photocopies thereof and have
such discussions with officers, employees and public accountants of the Debtor
as the Agent may deem reasonably necessary, and the Debtor agrees to render to
the Agent, at the Debtor's cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. The Agent and its
representatives shall upon reasonable notice and during normal business hours
also have the right to enter into and upon any premises where any of the
Inventory or the Equipment is located for the purpose of inspecting the same,
observing its use or protecting the interests of the Agent therein.
(b) Audits. The Debtor shall permit the Lenders, the Agent and their
representatives and advisors to review the operations of the Debtor and perform
the audits and examinations as provided in Section 6.1(l) of the Revolving
Credit Agreement.
Section 4.18. Maintenance of Equipment. The Debtor will, at its
expense, maintain the Equipment in good operating condition, ordinary
wear and tear excepted.
Section 4.19. Covenants Regarding Patent and Trademark Collateral.
(a) Generally. At such time as the Debtor shall acquire any Patents or
Trademarks, it will comply with the terms, covenants and warranties of this
Section 4.19.
(b) Continued Use of Trademark. The Debtor (either itself or through licensees)
will, unless the Debtor shall reasonably determine, after consultation with the
Agent, that a Trademark is of negligible economic value to the Debtor, (i)
continue to use each Trademark on each and every Trademark class of goods
applicable to its current products and services as reflected in its current
catalogs, brochures and price lists in order to maintain each Trademark in full
force and free from any claim of abandonment for non-use, (ii) maintain as in
the past the quality of products and services offered under each Trademark,
(iii) employ each Trademark with the appropriate notice of registration, (iv)
not adopt or use any mark which is confusingly similar to a colorable imitation
of any Trademark and (v) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly omit to do any act whereby any Trademark may become
invalidated.
(c) No Abandonment. The Debtor will not, unless the Debtor shall reasonably
determine, after consultation with the Agent, that a Patent is of negligible
economic value to the Debtor, do any act, or knowingly omit to do any act,
whereby any Patent may be abandoned or dedicated.
(d) Notice of Abandonment or Adverse Determinations. The Debtor shall notify the
Agent immediately if it knows, or has reason to know, that any application or
registration relating to any Patent or Trademark may become abandoned or
dedicated, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in any
proceeding in the United States Patent and Trademark Office or any court of
tribunal in any country) regarding the Debtor's ownership of any Patent or
Trademark, its right to register the same or keep and maintain the same.
(e) Filings After Notice to Agent. In no event shall the Debtor, either itself
or through any agent, employee, licensee or designee, file an application for
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless it promptly informs the Agent and, upon
request of the Agent, executes and delivers any and all agreements, instruments,
documents and papers as the Agent may request to evidence the Agent's security
interest in such Patent or Trademark and the goodwill and general intangibles of
the Debtor relating thereto or represented thereby, and the Debtor hereby
constitutes the Agent its attorney-in-fact to execute and file all such writings
for the foregoing purposes, all such acts of such attorney being hereby ratified
and confirmed.
(f) Pursuit of Applications and Maintenance of Registrations. The Debtor will
take all necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Patents and Trademarks, including without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability; provided, however, that no such Patent or Trademark shall
be required to be maintained or pursued to the extent such Patent or Trademark
is determined by the Debtor, after consultation with the Agent, to be of
negligible economic value to the Debtor.
(g) Notice of Infringement. If any of the Patent and Trademark Collateral is
infringed, misappropriated or diluted by a third party, the Debtor shall
promptly notify the Agent after it learns thereof and shall, unless the Debtor
shall reasonably determine, after consultation with the Agent, that such Patent
and Trademark Collateral is of negligible economic value to the Debtor, promptly
sue for infringement, misappropriation of dilution, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation or dilution, or take such other action as the Debtor shall
reasonably deem appropriate under the circumstances to protect such Patent and
Trademark Collateral.
Section 4.20. Termination of Federal Contracts. With respect to each Federal
Contract in respect of which the Debtor is required to execute an Assignment of
Federal Contract in accordance with Section 4.21 hereof, the Debtor shall give
prompt written notice to the Agent if the U.S. Government shall terminate or
threaten to terminate (whether for convenience or default) any such Federal
Contract with the Debtor having a value (including unexercised options) of
$100,000 or more. In addition, the Debtor shall give prompt written notice to
the Agent if the U.S. Government shall terminate or threaten to terminate any
contract between the U.S. Government and any other prime contractor under which
the Debtor is a subcontractor if the value of such subcontract (including
unexercised options) is $100,000 or more.
Section 4.21. Federal Contracts. The Debtor shall provide to the Agent, as soon
as reasonably practicable but not later than forty-five (45) days following the
end of each Fiscal Quarter, a report identifying each Federal Contract to which
it is a party, having attached thereto a copy of the first two pages of such
Federal Contract and any amendment thereto, to the extent not previously
provided to the Agent. At the request of the Agent (unless an Event of Default
shall have occurred and be continuing, in which case no such request shall be
required), the Debtor shall execute and deliver to the Agent an Assignment of
Federal Contract, in substantially the form of Exhibit A hereto (the "Assignment
of Federal Contract"), and execute any other instruments or take any other steps
required by the Agent in order that all moneys due or to become due under such
Federal Contracts shall be assigned to the Agent and notice thereof given under
the Assignment of Claims Act, including without limitation delivery of Notices
of Assignments with respect to each Federal Contract as contemplated by Appendix
A to Exhibit A hereto.
Section 4.22. Reimbursement Obligation. Should the Debtor fail to comply with
the provisions of this Security Agreement, the Revolving Credit Agreement or any
other agreement relating to the Collateral such that the value of any Collateral
or the validity, perfection, rank or value of any security interest granted to
the Agent hereunder or thereunder is thereby diminished or potentially
diminished or put at risk (as reasonably determined by the Agent), the Agent on
behalf of the Debtor may, but shall not be required to, effect such compliance
on behalf of the Debtor, and the Debtor shall reimburse the Agent for the cost
thereof on demand, and interest shall accrue on such reimbursement obligation
from the date the relevant costs are incurred until reimbursement thereof in
full at the Default Rate.
ARTICLE V.
REMEDIES; RIGHTS UPON DEFAULT
Section 5.01. UCC Rights. In the event that any portion of the Obligations has
been declared or becomes due and payable in accordance with the Revolving Credit
Agreement or other Credit Documents and such Obligations have not been paid in
full, the Agent may in addition to all other rights and remedies granted to it
in this Security Agreement and in any other instrument or agreement securing,
guarantying, evidencing or relating to the Obligations, exercise (i) all rights
and remedies of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and (ii) all other rights
available to the Agent at law or in equity.
Section 5.02. Payments on Collateral. Without limiting the rights of
the Agent under any other provision of this Security Agreement, if an
Event of Default shall occur and be continuing:
(i) all payments received by the Debtor under or in connection with any of the
Collateral shall be held by the Debtor in trust for the Agent, shall be
segregated from other funds of the Debtor and shall forthwith upon receipt by
the Debtor be turned over to the Agent, in the same form as received by the
Debtor (duly indorsed by the Debtor to the Agent, if required to permit
collection thereof by the Agent); and
(ii) all such payments received by the Agent (whether from the Debtor or
otherwise) may, in the sole discretion of the Agent, be held by the Agent as
collateral security for, and/or then or at any time thereafter applied in whole
or in part by the Agent to the payment of, the expenses and the Obligations as
set forth in Section 5.11 hereof.
Section 5.03. Possession of Collateral. In furtherance of the foregoing, the
Debtor expressly agrees that, if an Event of Default shall occur and be
continuing, the Agent may (i) by judicial powers, or without judicial process if
it can be done without breach of the peace, enter any premises where any of such
Collateral is or may be located and, without charge or liability to the Agent,
seize and remove such Collateral from such premises and (ii) have access to and
use of the Debtor's books and records relating to such Collateral.
Section 5.04. Sale of Collateral; Notice.
(a) Sale of Collateral. The Debtor expressly agrees that if an Event of Default
shall occur and be continuing, the Agent, without demand of performance or other
demand or notice of any kind (except the notice specified below of the time and
place of any public or private sale) to or upon the Debtor or any other Person
(all of which demands and/or notices are hereby waived by the Debtor), may
forthwith (i) apply the cash, if any, then held by it as collateral as specified
in Section 5.11 hereof and (ii) if there shall be no cash or such cash shall be
insufficient to pay the Obligations in full, collect, receive, appropriate and
realize upon the Collateral, and/or sell, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral (or contract to do
so) or any part thereof in one or more parcels (which need not be in round lots)
at public or private sale, at any office of the Agent or elsewhere in such
manner as is commercially reasonable and, as the Agent may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. The
Agent shall have the right upon any such public sale, and, 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, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, and
thereafter to hold the same, absolutely and free from any right or claim of any
kind. To the extent permitted by applicable law, the Debtor waives all claims,
damages and demands against the Agent arising out of the foreclosure,
repossession, retention or sale of the Collateral.
(b) Notice of Sale. Unless the Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market, the Agent shall give
the Debtor ten (10) days' written notice of its intention to make any such
public or private sale or sale at a broker's board or on a securities exchange.
Such notice shall (i) in the case of a public sale, state the time and place
fixed for such sale, (ii) in the case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof being sold,
will first be offered for sale and (iii) in the case of a private sale, state
the day after which such sale may be consummated. The Agent shall not obligated
to make any such sale pursuant to any such notice. The Agent may adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. In the case of any
sale of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Agent until the selling price is paid
by the purchaser thereof, but the Agent shall not incur any liability in case of
the failure of such purchase to take up and pay for the Collateral so sold and,
in the case of such failure, such Collateral may again be sold upon like notice.
(c) Special Provisions Relating to Sales of Securities. The Debtor recognizes
that the Agent may be unable to effect a public sale of any or all the
Collateral constituting a "security" (as such term is defined in the Securities
Act) by reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers that will
be obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or resale
thereof. The Debtor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The Agent
shall be under no obligation to delay a sale of any of Collateral constituting a
security for the period of time necessary to permit the issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such issuer would agree to do so.
Section 5.05. Rights of Purchasers. Upon any sale of the Collateral (whether
public or private), the Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each purchaser
(including the Agent) at any such sale shall hold the Collateral so sold
absolutely, free from any claim or right of whatever kind, including any equity
or right of redemption of the Debtor who, to the extent permitted by law, hereby
specifically waives all rights of redemption, including, without limitation, any
right to redeem the Collateral under Section 9-506 of the UCC, and any right to
a judicial or other stay or approval which it has or may have under any law now
existing or hereafter adopted.
Section 5.06. Additional Rights of the Agent.
(a) Right to Maintain Proceedings. The Agent (i) shall have the right and power
to institute and maintain such suits and proceedings as it may deem appropriate
to protect and enforce the rights vested in it by this Security Agreement and
(ii) may proceed by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Collateral and to sell all or, from time to time, any of
the Collateral under the judgment or decree of a court of competent
jurisdiction.
(b) Appointment of Receiver. The Agent shall, to the extent permitted by
applicable law, without notice to the Debtor to any party claiming through the
Debtor, without regard to the solvency or insolvency at such time of any Person
then liable for the payment of any of the Obligations, without regard to the
then value of the Collateral and without requiring any bond from any complainant
in such proceedings, be entitled as a matter of right to the appointment of a
receiver or receivers (who may be the Agent) of the Collateral or any part
thereof, pending such proceedings, with such powers as the court making such
appointment shall confer, and to the entry of an order directing that the
profits, revenues and other income of the property constituting the whole or any
part of the Collateral be segregated, sequestered and impounded for the benefit
of the Agent, and the Debtor irrevocably consents to the appointment of such
receiver or receivers and to the entry of such order.
(c) No Duty to Exercise Rights. In no event shall the Agent have any duty to
exercise any rights or take any steps to preserve the rights of the Agent in the
Collateral, nor shall the Agent be liable to the Debtor or any other Person for
any loss caused by the Agent's failure to meet any obligation imposed by Section
9-207 of the UCC or any successor provision. Without limiting the foregoing, the
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Agent accords its own property,
it being understood that the Agent shall not have any duty or responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Agent has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.
Section 5.07. Remedies Not Exclusive, etc.
(a) Remedies Not Exclusive. No remedy conferred upon or reserved to the Agent in
this Security Agreement is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred herein or now or hereafter existing at law, in
equity or by statute.
(b) Restoration of Rights. If the Agent shall have proceeded to enforce any
right, remedy or power under this Security Agreement and the proceeding for the
enforcement thereof shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Agent, the Debtor and the Agent
shall, subject to any determination in such proceeding, severally and
respectively be restored to their former positions and rights under this
Security Agreement, and thereafter all rights, remedies and powers of the Agent
shall continue as though no such proceedings had been taken.
(c) Enforcement. All rights of action under this Security Agreement may be
enforced by the Agent without the possession of any instrument evidencing any
Obligation or the production thereof at any trial or other proceeding relative
thereto, and any suit or proceeding instituted by the Agent shall be brought in
its name and any judgment shall be held as part of the Collateral.
Section 5.08. Waiver and Estoppel.
(a) No Actions to Impede Sale of Collateral. The Debtor agrees, to the extent it
may lawfully do so, that it will not at any time in any manner whatsoever claim
or take the benefit or advantage of any appraisal, valuation, stay, extension,
moratorium, turnover or redemption law, or any law permitting it to direct the
order in which the Collateral shall be sold, now or at any time hereafter in
force which may delay, prevent or otherwise affect the performance or
enforcement of this Security Agreement, and hereby waives all benefit or
advantage of all such laws. The Debtor covenants that it will not hinder, delay
or impede the execution of any power granted to the Agent in this Security
Agreement, any Assignment of Federal Contract or any other Credit Document.
(b) Collateral Sold As An Entirety. The Debtor, to the extent it may lawfully do
so, on behalf of itself and all who claim through or under it, including without
limitation any and all subsequent creditors, vendees, assignees and lienors,
waives and releases all rights to demand or to have any marshalling of the
Collateral upon any sale, whether made under any power of sale granted herein or
pursuant to judicial proceedings or under any foreclosure or any enforcement of
this Security Agreement, and consents and agrees that all of the Collateral may
at any such sale be offered and sold as an entirety.
(c) Waiver of Notices. The Debtor waives, to the extent permitted by law,
presentment, demand, protest and any notice of any kind (except the notices
expressly required hereunder) in connection with this Security Agreement and any
action taken by the Agent with respect to the Collateral.
Section 5.09. Power of Attorney; Powers Coupled With An Interest.
(a) Power of Attorney. Without limiting any other right granted hereunder, the
Debtor hereby irrevocably constitutes and appoints the Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Debtor and in the name of the
Debtor or in its own name, from time to time in the Agent's reasonable
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purpose of this Security Agreement and, without limiting the generality of the
foregoing, hereby gives the Agent the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor, to do the following:
(i) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral;
(ii) to effect any repairs or any insurance called for by the terms of this
Security Agreement or any other Credit Document, and to pay all or any part of
the premiums therefor and the costs thereof;
(iii) upon the occurrence and continuance of any Event of Default and otherwise
to the extent provided in this Security Agreement, (A) to direct any party
liable for any payment under any of the Collateral to make payment of any and
all moneys due and to come due thereunder directly to the Agent or as the Agent
shall direct, (B) to receive payment of and receipt for, and to demand and sue
for, any and all moneys, claims and other amounts due and to become due at any
time in respect of or arising out of the Collateral, (C) to sign and indorse and
receive, take, assign and deliver, any checks, notes, drafts, negotiable and
non-negotiable instruments, any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other documents
relating to the Collateral, (D) to commence, settle, compromise, compound,
prosecute, defend or adjust any claim, suit, action or proceeding with respect
to, or in connection with, the Collateral, (E) to sell, transfer, assign or
otherwise deal in or with the Collateral or any part thereof, as fully and
effectively as if the Agent were the absolute owner thereof and (F) to do, at
its option, but at the expense of the Debtor, at any time or from time to time,
all acts and things which the Agent deems necessary to protect, preserve or
realize upon the Collateral and the Agent's security interest therein, in order
to effect the intent of this Security Agreement, all as fully and effectively as
the Debtor might do.
(b) Powers Coupled With an Interest. All authorizations and agencies granted or
provided herein with respect to the Collateral, including the powers granted
under clause (a) of this Section 5.9, are irrevocable and powers coupled with an
interest.
Section 5.10. Certain Provisions Relating to Securities. Solely with respect to
any Collateral constituting a "security" (as defined in the Securities Act), if
an Event of Default shall have occurred and be continuing, all such securities
(as defined in the Securities Act) constituting a part of the Collateral shall,
at the request of the Agent, be registered in the name of the Agent or its
nominee, and the Agent or its nominee may thereafter exercise (i) all voting,
corporate and other rights, powers and privileges pertaining to such Collateral
at any meeting of shareholders of the issuer thereof or otherwise, and (ii) any
and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such Collateral as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all such Collateral upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the structure of
any such issuer, or upon the exercise by the Debtor or the Agent of any right,
privilege or option pertaining to such Collateral, and in connection therewith,
the right to deposit and deliver any and all such Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine), all without liability except to account for
property actually received by it and except as provided in Section 5.6(c)
hereof, but the Agent shall have no duty to the Debtor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
Section 5.11. Application of Monies. The proceeds of any sale of, or
other realization upon, all or any part of the Collateral shall be
applied by the Agent in the following order of priority:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the Agent and its agents and
counsel, and all expenses, liabilities and advances incurred or made by the
Agent, its agents and counsel in connection therewith or in connection with the
care, safekeeping or otherwise of any or all of the Collateral;
second, to payment of the Obligations, in such order as the Agent may
elect; and
third, any surplus then remaining shall be paid to the Debtor,
or its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same (including pursuant to Section 9-504(1)(C) of the UCC) or as a
court of competent jurisdiction may direct.
ARTICLE VI.
MISCELLANEOUS
Section 6.01. Notices. All notices, requests and other communications to a party
hereunder shall be in writing and shall be given to such party at its address
set forth on the signature page hereof or such other address as such party may
hereafter specify for that purpose by notice to the other. Each such notice,
request or other communication shall be effective (i) in the case of telephonic
notice (to the extent expressly permitted hereunder), when made, (ii) in the
case of notice delivered by overnight express courier, one Business Day after
the Business Day such notice was delivered to such courier, (iii) in the case of
notice delivered by first class mail, three Business Days after being deposited
in the mail, postage prepaid, return receipt requested, (iv) in the case of
notice by hand, when delivered, or (v) in the case of notice by any customary
means of telecommunication, when sent provided confirmation of receipt or answer
back has been received, in each case if addressed to any party hereto as
provided herein. Rejection or refusal to accept, or the inability to deliver
because of a changed address of which no notice was given, shall not affect the
validity of notice given in accordance with this section.
Section 6.02. No Waiver; Cumulative Remedies. The Agent shall not by any act
(except by a written instrument pursuant to Section 6.3 hereof) be deemed to
have waived any right or remedy hereunder. No failure to exercise, nor any delay
in exercising, on the part of the Agent any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
Section 6.03. Amendments and Waivers. None of the terms or provisions of this
Security Agreement may be amended, supplemented or otherwise modified except by
a written instrument executed by the Debtor and the Agent; provided that any
provision of this Security Agreement may be waived by the Agent in a letter or
agreement executed by the Agent or by telex or facsimile transmission from the
Agent.
Section 6.04. Successors and Assigns. The provisions of this Security Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that the Debtor may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Agent.
Section 6.05. Governing Law. THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
VIRGINIA, OTHER THAN ITS LAWS RESPECTING CHOICE OF LAW OTHER THAN
THOSE CONTAINED IN THE UCC.
Section 6.06. Limitation by Law; Severability.
(a) All rights, remedies and powers provided in this Security Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Security Agreement invalid, unenforceable in whole or in part,
or not entitled to be recorded, registered or filed upon the provisions of any
applicable law.
(b) If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Agent in order to carry out the intentions
of the parties hereto as nearly as may be possible and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
Section 6.07. Counterparts. This Security Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each complete set of which, when so executed and delivered by all parties, shall
be an original, but all such counterparts shall together constitute but one and
the same instrument.
Section 6.08. Expenses of the Agent. The Debtor shall pay to the Agent from time
to time upon demand, all of the costs and expenses incurred by the Agent or any
Lender (including, without limitation, the reasonable fees and disbursements of
counsel and any amounts payable by the Agent or any Lender to any of their
respective agents) (i) arising in connection with the administration,
modification, amendment, waiver or termination of this Security Agreement or any
document or agreement contemplated hereby or any consent or waiver hereunder or
thereunder or (ii) incurred in connection with the administration of this
Security Agreement, or any document or agreement contemplated hereby, or in
connection with the administration, sale or other disposition of Collateral
hereunder or under any document or agreement contemplated hereby or the
preservation, protection or defense of the rights of the Agent or any Lender in
and to the Collateral.
Section 6.09. Indemnification. The Debtor shall at all times hereafter
indemnify, hold harmless and, on demand, reimburse the Agent and the Lenders and
their respective subsidiaries, affiliates, successors, assigns, officers,
directors, employees and agents, and their respective heirs, executors,
administrators, successors and assigns (all of the foregoing parties, including,
but not limited to, the Agent, being hereinafter collectively referred to as the
"Indemnities" and individually as an "Indemnitee") from, against and for any and
all liabilities, obligations, claims, damages, actions, penalties, causes of
action, losses, judgments, suits, costs, expenses and disbursements, including,
without limitation, attorney's fees (any and all of the foregoing being
hereinafter collectively referred to as the "Liabilities" and individually as a
"Liability") which the Indemnitees, or any of them, might be or become
subjected, by reason of, or arising out of the preparation, execution, delivery,
modification, administration or enforcement of, or performance of the Agent's
rights under, this Security Agreement or any other document, instrument or
agreement contemplated hereby or executed in connection herewith; provided,
however, that the Debtor shall not be liable to any Indemnitee for any Liability
caused solely by the gross negligence or willful misconduct of such Indemnitee.
In no event shall any Indemnitee, as a condition to enforcing its rights under
this Section 6.9 or otherwise, be obligated to make a claim against any other
Person (including, without limitation, the Agent) to enforce its rights under
this Section 6.9.
Section 6.10. Termination; Survival. This Security Agreement shall terminate
when the security interests granted hereunder have terminated and the Collateral
has been released as provided in Section 2.6; provided, however, that the
obligations of the Debtor under Section 4.22 and the provisions of this Article
6 shall survive any such termination.
Section 6.11. Judicial Proceedings; Waiver of Jury Trial. Any judicial
proceeding brought against the Debtor with respect to any Credit Agreement
Related Claim hereby may be brought in any court of competent jurisdiction in
the Commonwealth of Virginia, County of Fairfax, or any Federal court in the
Eastern District of Virginia, and, by execution and delivery of this Security
Agreement, the Debtor (a) accepts, generally and unconditionally, the
nonexclusive jurisdiction of such courts and any related appellate court and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with any Credit Agreement Related Claim and (b) irrevocably waives any objection
it may now or hereafter have as to the venue of any such proceeding brought in
such a court or that such a court is an inconvenient forum. The Debtor hereby
waives personal service of process and consents that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section 6.1
hereof, and service so made shall be deemed completed on the earlier of (x) the
receipt thereof and (y) if sent by registered or certified mail (return receipt
requested), the fifth (5th) Business Day after such service is deposited in the
mail. Nothing herein shall affect the right of the Agent to serve process in any
other manner permitted by law or shall limit the right of the Agent to bring
proceedings against the Debtor in the courts of any other jurisdiction. Any
judicial proceeding by the Debtor against the Agent relating to or involving any
Credit Agreement Related Claim hereby shall be brought only in a court located
in the Commonwealth of Virginia, County of Fairfax, or the Federal court in the
Eastern District of Virginia. THE DEBTOR AND THE AGENT HEREBY UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES
INVOLVING ANY CREDIT AGREEMENT RELATED CLAIM.
Section 6.12. Integration. This Security Agreement and the other Credit
Documents constitute the entire agreement of the Agent, the Lenders, the
Borrower and the other Credit Parties with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Agent or any Lender relative to the subject matter hereof or
thereof not expressly set forth or referred to herein or in the other Credit
Documents.
Section 6.13. Authority of Agent. The Debtor acknowledges that the rights and
responsibilities of the Agent under this Security Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Agent and the Lenders, be governed by the Revolving Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Debtor, the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid authority so
to act or refrain from acting, and the Debtor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.
Section 6.14. Headings, Bold Type and Table of Contents. The section headings,
subsection headings, and bold type used herein and the Table of Contents hereto
have been inserted for convenience of reference only and do not constitute
matters to be considered in interpreting this Security Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed by their respective authorized officers as of the
day and year first written above.
Address: PRIVATE LABEL ENERGY
77 Franklin Street SERVICES, INC.
Suite 600
Boston, MA 02110 By: /s/ Glenn J. Dozier___________
Attention: Glenn J. Dozier Name: Glenn J. Dozier
Phone: (617) 423-0545 Title: Senior Vice President
Fax: (617) 422-0694 and Chief Financial Officer
Address: NATIONSBANK, N.A.
8300 Greensboro Drive
Suite 550 By: /s/ James W. Gaittens_____
McLean, Virginia 22102 Name: James W. Gaittens
Attention: James W. Gaittens Title: Senior Vice President
Phone: (703) 761-8405
Fax: (703) 917-0519
Schedule 3.4
PRIVATE LABEL ENERGY SERVICES, INC.
Place of Business
77 Franklin Street
Suite 600
Boston, Massachusetts 02110
Schedule 3.5
PRIVATE LABEL ENERGY SERVICES
Location of Collateral
77 Franklin Street
Suite 600
Boston, Massachusetts 02110
Schedule 3.6
PRIVATE LABEL ENERGY SERVICES, INC.
Trade/Division Names
Private Label Energy Services, Inc.
Private Label Energy Services
PLES f/k/a HB Energy, Inc.
Schedule 3.7
PRIVATE LABEL ENERGY SERVICES, INC.
Primary Collateral Locations
77 Franklin Street
Suite 600
Boston, Massachusetts 02110
Schedule 3.8
PRIVATE LABEL ENERGY SERVICES, INC.
Patents and Trademarks
None.
Schedule 4.1
PRIVATE ENERGY SERVICES, INC.
UCC FILINGS
None.