Exhibit 4.2
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of February 26, 2008, between COHESANT INC., a
Delaware corporation (the "Company"), and REGIONS BANK, an Alabama banking
corporation (the "Lender").
WHEREAS, the Company has entered into a Credit Agreement dated as of even
date (as amended and in effect from time to time, the "Credit Agreement"), with
the Lender, pursuant to which the Lender, subject to the terms and conditions
contained therein, is to make loans or otherwise to extend credit to the
Company; and
WHEREAS, it is a condition precedent to the Lender's making any loans or
otherwise extending credit to the Company under the Credit Agreement that the
Company execute and deliver to the Lender a security agreement in substantially
the form hereof, and
WHEREAS, the Company wishes to grant security interests in favor of the
Lender as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions shall
have the respective meanings provided therefor in the Credit Agreement. The term
"State", as used herein, means the State of Indiana. All terms defined in the
Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in Article 9. The term "Obligations", as used herein, means
all of the indebtedness, Obligations and liabilities of the Company to the
Lender, individually or collectively, whether direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising under or in respect of the Credit Agreement, any promissory notes,
guaranties or other instruments or agreements executed and delivered pursuant
thereto or in connection therewith or this Agreement, and the term "Event of
Default", as used herein, means an Event of Default under the Credit Agreement.
2. Grant of Security Interest. The Company hereby grants to the Lender, to
secure the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Lender the following properties,
assets and rights of the Company, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"): all personal and fixture
property of every kind and nature including without limitation all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including health-care
insurance receivables), chattel paper (whether tangible or electronic), deposit
accounts, letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), commercial tort claims, securities and all other
investment property, supporting obligations, any other contract rights or rights
to the payment of money, insurance claims and proceeds, tort claims, and all
general intangibles including, without limitation, all payment intangibles,
patents, patent applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, software, engineering drawings, service
marks, customer lists, goodwill, and all licenses, permits, agreements of any
kind or nature pursuant to which the Company possesses, uses or has authority to
possess or use property (whether tangible or intangible) of others or others
possess, use or have authority to possess or use property (whether tangible or
intangible) of the Company, and all recorded data of any kind or nature,
regardless of the medium of recording including, without limitation, all
software, writings, plans, specifications and schematics. The Lender
acknowledges that the attachment of its security interest in any commercial tort
claim as original collateral is subject to the Company's compliance with Section
4.7 hereof.
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3. Authorization to File Financing Statements. The Company hereby
irrevocably authorizes the Lender at any time and from time to time to file in
any Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of the
Company or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State or such Jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the State for
the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Company is an organization, the type of
organization and any organization identification number issued to the Company
and, (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. The
Company agrees to furnish any such information to the Lender promptly upon
request. The Company also ratifies its authorization for the Lender to have
filed in any Uniform Commercial Code Jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.
4. Other Actions. Further to insure the attachment, perfection and first
priority of, and the ability of the Lender to enforce, the Lender's security
interest in the Collateral, the Company agrees, in each case at the Company's
own expense, to take the following actions with respect to the following
Collateral:
4.1. Promissory Notes and Tangible Chattel Paper. If the Company shall
at any time hold or acquire any promissory notes or tangible
chattel paper, the Company shall forthwith endorse, assign and
deliver the same to the Lender, accompanied by such instruments
of transfer or assignment duly executed in blank as the Lender
may from time to time specify.
4.2. Deposit Accounts. For each deposit account that the Company at
any time opens or maintains, the Company shall, at the Lender's
request and option, pursuant to an agreement in form and
substance satisfactory to the Lender, either (a) cause the
depositary bank to agree to comply at any time with instructions
from the Lender to such depositary bank directing the disposition
of funds from time to time credited to such deposit account,
without further consent of the Company, or (b) arrange for the
Lender to become the customer of the depositary bank with respect
to the deposit account, with the Company being permitted, only
with the consent of the Lender, to exercise rights to withdraw
funds from such deposit account. The Lender agrees with the
Company that the Lender shall not give any such instructions or
withhold any withdrawal rights from the Company, unless an Event
of Default has occurred and is continuing, or, after giving
effect to any withdrawal not otherwise permitted by the Loan
Documents, would occur. The provisions of this paragraph shall
not apply to (i) any deposit account for which the Company, the
depositary bank and the Lender have entered into a cash
collateral agreement specially negotiated among the Company, the
depositary bank and the Lender for the specific purpose set forth
therein, (ii) deposit accounts for which the Lender is the
depositary, and (iii) deposit accounts specially and exclusively
used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of the Company's salaried
employees.
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4.3. Investment Property. If the Company shall at any time hold or
acquire any certificated securities, the Company shall forthwith
endorse, assign and deliver the same to the Lender, accompanied
by such instruments of transfer or assignment duly executed in
blank as the Lender may from time to time specify. If any
securities now or hereafter acquired by the Company are
uncertificated and are issued to the Company or its nominee
directly by the issuer thereof, the Company shall immediately
notify the Lender thereof and, at the Lender's request and
option, pursuant to an agreement in form and substance
satisfactory to the Lender, either (a) cause the issuer to agree
to comply with instructions from the Lender as to such
securities, without further consent of the Company or such
nominee, or (b) arrange for the Lender to become the registered
owner of the securities. If any securities, whether certificated
or uncertificated, or other investment property now or hereafter
acquired by the Company are held by the Company or its nominee
through a securities intermediary or commodity intermediary, the
Company shall immediately notify the Lender thereof and, at the
Lender's request and option, pursuant to an agreement in form and
substance satisfactory to the Lender, either (i) cause such
securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other
instructions from the Lender to such securities intermediary as
to such securities or other investment property, or (as the case
may be) to apply any value distributed on account of any
commodity contract as directed by the Lender to such commodity
intermediary, in each case without further consent of the Company
or such nominee, or (ii) in the case of financial assets or other
investment property held through a securities intermediary,
arrange for the Lender to become the entitlement holder with
respect to such investment property, with the Company being
permitted, only with the consent of the Lender, to exercise
rights to withdraw or otherwise deal with such investment
property. The Lender agrees with the Company that the Lender
shall not give any such entitlement orders or instructions or
directions to any such issuer, securities intermediary or
commodity intermediary, and shall not withhold its consent to the
exercise of any withdrawal or dealing rights by the Company,
unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights
not otherwise permitted by the Loan Documents, would occur. The
provisions of this paragraph shall not apply to any financial
assets credited to a securities account for which the Lender is
the securities intermediary.
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4.4. Collateral in the Possession of a Bailee. If any goods are at any
time in the possession of a bailee, the Company shall promptly
notify the Lender thereof and, if requested by the Lender, shall
promptly obtain an acknowledgment from the bailee, in form and
substance satisfactory to the Lender, that the bailee holds such
Collateral for the benefit of the Lender and shall act upon the
instructions of the Lender, without the further consent of the
Company. The Lender agrees with the Company that the Lender shall
not give any such instructions unless an Event of Default has
occurred and is continuing or would occur after taking into
account any action by the Company with respect to the bailee.
4.5. Electronic Chattel Paper and Transferable Records. If the Company
at any time holds or acquires an interest in any electronic
chattel paper or any "transferable record," as that term is
defined in Section 201 of the federal Electronic Signatures in
Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant
jurisdiction, the Company shall promptly notify the Lender
thereof and, at the request of the Lender, shall take such action
as the Lender may reasonably request to vest in the Lender
control, under Section 9.1-105 of the Uniform Commercial Code, of
such electronic chattel paper or control under Section 201 of the
federal Electronic Signatures in Global and National Commerce Act
or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such Jurisdiction, of such
transferable record. The Lender agrees with the Company that the
Lender will arrange, pursuant to procedures satisfactory to the
Lender and so long as such procedures will not result in the
Lender's loss of control, for the Company to make alterations to
the electronic chattel paper or transferable record permitted
under UCC Section 9.1-105 or, as the case may be, Section 201 of
the federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for
a party in control to make without loss of control, unless an
Event of Default has occurred and is continuing or would occur
after taking into account any action by the Company with respect
to such electronic chattel paper or transferable record.
4.6. Letter-of-Credit Rights. If the Company is at any time a
beneficiary under a letter of credit now or hereafter issued in
favor of the Company, the Company shall promptly notify the
Lender thereof and, at the request and option of the Lender, the
Company shall, pursuant to an agreement in form and substance
satisfactory to the Lender, either (i) arrange for the issuer and
any confirmer of such letter of credit to consent to an
assignment to the Lender of the proceeds of any drawing under the
letter of credit, or (ii) arrange for the Lender to become the
transferee beneficiary of the letter of credit, with the Lender
agreeing, in each case, that the proceeds of any drawing under
the letter to credit are to be applied as provided in the Credit
Agreement.
4.7 Commercial Tort Claims. If the Company shall at any time hold or
acquire a commercial tort claim, the Company shall immediately
notify the Lender in a writing signed by the Company of the brief
details thereof and grant to the Lender in such writing a
security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and
substance satisfactory to the Lender.
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4.8. Other Actions as to any and all Collateral. The Company further
agrees to take any other action reasonably requested by the
Lender to insure the attachment, perfection and first priority
of, and the ability of the Lender to enforce, the Lender's
security interest in any and all of the Collateral including,
without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating
thereto under the Uniform Commercial Code, to the extent, if any,
that the Company's signature thereon is required therefor, (b)
causing the Lender's name to be noted as secured party on any
certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of
the Lender to enforce, the Lender's security interest in such
Collateral, (c) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce,
the Lender's security interest in such Collateral, (d) obtaining
governmental and other third party consents and approvals,
including without limitation any consent of any licensor, lessor
or other person obligated on Collateral, (e) obtaining waivers
from mortgagees and landlords in form and substance satisfactory
to the Lender, and (f) taking all actions required by any earlier
versions of the Uniform Commercial Code or by other law, as
applicable in any relevant Uniform Commercial Code jurisdiction,
or by other law as applicable in any foreign jurisdiction.
5. Relation to Other Security Documents. The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by the Company to the Lender and securing the payment or performance of any of
the Obligations. Nothing contained in any such real estate mortgage or deed of
trust shall derogate from any of the rights or remedies of the Lender hereunder.
In addition, the provisions of this Agreement shall be read and construed with
the other Security Documents indicated below in the manner so indicated.
6. Representations and Warranties Concerning Company's Legal Status. The
Company has previously delivered to the Lender a certificate signed by the
Company and entitled "Perfection Certificate" (the "Perfection Certificate") in
substantially the form attached hereto as Appendix I. The Company represents and
warrants to the Lender as follows: (a) the Company's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof, (b)
the Company is an organization of the type and organized in the jurisdiction set
forth in the Perfection Certificate, (c) the Perfection Certificate accurately
sets forth the Company's organizational identification number or accurately
states that the Company has none, (d) the Perfection Certificate accurately sets
forth the Company's place of business or, if more than one, its chief executive
office as well as the Company's mailing address if different, and (e) all other
information set forth on the Perfection Certificate pertaining to the Company is
accurate and complete.
7. Covenants Concerning Company's Legal Status. The Company covenants with
the Lender as follows: (a) without providing at least thirty (30) days prior
written notice to the Lender, the Company will not change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if the Company does not
have an organizational identification number and later obtains one, the Company
shall forthwith notify the Lender of such organizational identification number,
and (c) the Company will not change its type of organization, jurisdiction of
organization or other legal structure.
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8. Representations and Warranties Concerning Collateral, Etc. The Company
further represents and warrants to the Lender as follows: (a) the Company is the
owner of or has other rights in or power to transfer the Collateral, free from
any adverse lien, security interest or other encumbrance, except for the
security interest created by this Agreement and other liens permitted by the
Credit Agreement, (b) none of the Collateral constitutes, or is the proceeds of,
"farm products" as defined in ss. 9.1-102(a)(34) of the Uniform Commercial Code
of the State, (c) none of the account debtors or other persons obligated on any
of the Collateral is a governmental authority subject to the federal Assignment
of Claims Act or like federal, state or local statute or rule in respect of such
Collateral, (d) the Company holds no commercial tort claim except as indicated
on the Perfection Certificate, (e) the Company has at all times operated its
business in compliance with all applicable provisions of the federal Fair Labor
Standards Act, as amended, and with all applicable provisions of federal, state
and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances, and (f) all other information set
forth on the Perfection Certificate pertaining to the Collateral is accurate and
complete.
9. Covenants Concerning Collateral, Etc. The Company further covenants with
the Lender as follows: (a) the Collateral, to the extent not delivered to the
Lender pursuant to Section 4 hereof, will be kept at those locations listed on
the Perfection Certificate and the Company will not remove the Collateral from
such locations, without providing at least thirty (30) days prior written notice
to the Lender, (b) except for the security interest herein granted and liens
permitted by the Credit Agreement, the Company shall be the owner of or have
other rights in the Collateral free from any lien, security interest or other
encumbrance, and the Company shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Lender, (c) the Company shall not pledge, mortgage or create, or
suffer to exist a security interest in the Collateral in favor of any person
other than the Lender except for liens permitted by the Credit Agreement, (d)
the Company will keep the Collateral in good order and repair and will not use
the same in violation of law or any policy of insurance thereon, (e) as provided
in the Credit Agreement, the Company will permit the Lender, or its designee, to
inspect the Collateral at any reasonable time with forty-eight (48) hours notice
to Company, wherever located, (f) the Company will pay promptly when due all
taxes, assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of such Collateral or incurred
in connection with this Agreement, (g) the Company will continue to operate its
business in compliance with all applicable provisions of the federal Fair Labor
Standards Act, as amended, and with all applicable provisions of federal, state
and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances, and (h) the Company will not sell
or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral
or any interest therein except for (i) sales of inventory in the ordinary course
of business and (ii) so long as no Event of Default has occurred and is
continuing, sales or other dispositions of obsolescent items of equipment in the
ordinary course of business consistent with past practices.
10. Insurance.
10.1. Maintenance of Insurance. The Company will maintain with
financially sound and reputable insurers insurance with respect
to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of
businesses engaged in similar activities in similar geographic
areas. Such insurance shall be in such minimum amounts that the
Company will not be deemed a coinsurer under applicable insurance
laws, regulations and policies and otherwise shall be in such
amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to the Lender. In
addition, all such insurance shall be payable to the Lender as
loss payee. Without limiting the foregoing, the Company will (i)
keep all of its physical property insured with casualty or
physical hazard insurance on an "all risks" basis, with a full
replacement cost endorsement and an "agreed amount" clause in an
amount equal to 100% of the full replacement cost of such
property, (ii) maintain all such workers' compensation or similar
insurance as may be required by law, and (iii) maintain, in
amounts and with deductibles equal to those generally maintained
by businesses engaged in similar activities in similar geographic
areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or
about the properties of the Company; business interruption
insurance; and product liability insurance.
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10.2. Insurance Proceeds. The proceeds of any casualty insurance in
respect of any casualty loss of any of the Collateral shall,
subject to the rights, if any, of other parties with a prior
interest in the property covered thereby, (i) so long as no Event
of Default has occurred and is continuing and to the extent that
the amount of such proceeds is less than $50,000.00, be disbursed
to the Company for direct application by the Company solely to
the repair or replacement of the Company's property so damaged or
destroyed, and (ii) in all other circumstances, be held by the
Lender as cash collateral for the Obligations. The Lender may, at
its sole option, disburse from time to time all or any part of
such proceeds so held as cash collateral, upon such terms and
conditions as the Lender may reasonably prescribe, for direct
application by the Company solely to the repair or replacement of
the Company's property so damaged or destroyed, or the Lender may
apply all or any part of such proceeds to the Obligations.
10.3. Notice of Cancellation, Etc. All policies of insurance shall
provide for at least thirty (30) days prior written cancellation
notice to the Lender. In the event of failure by the Company to
provide and maintain insurance as herein provided, the Lender
may, at its option, provide such insurance and charge the amount
thereof to the Company. The Company shall furnish the Lender with
certificates of insurance and policies evidencing compliance with
the foregoing insurance provision.
11. Collateral Protection Expenses: Preservation of Collateral.
11.1. Expenses Incurred by Lender. In its discretion, the Lender may
discharge taxes and other encumbrances at any time levied or
placed on any of the Collateral, make repairs thereto and pay any
necessary filing fees or, if the debtor fails to do so, insurance
premiums. The Company agrees to reimburse the Lender on demand
for any and all expenditures so made. The Lender shall have no
obligation to the Company to make any such expenditures, nor
shall the making thereof relieve the Company of any default.
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11.2. Lender's Obligations and Duties. Anything herein to the contrary
notwithstanding, the Company shall remain liable under each
contract or agreement comprised in the Collateral to be observed
or performed by the Company thereunder. The Lender shall not have
any obligation or liability under any such contract or agreement
by reason of or arising out of this Agreement or the receipt by
the Lender of any payment relating to any of the Collateral, nor
shall the Lender be obligated in any manner to perform any of the
obligations of the Company under or pursuant to any such contract
or agreement, to make inquiry as to the nature or sufficiency of
any payment received by the Lender in respect of the Collateral
or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Lender
or to which the Lender may be entitled at any time or times. The
Lender's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under
ss. 9.1-207 of the Uniform Commercial Code of the State or
otherwise, shall be to deal with such Collateral in the same
manner as the Lender deals with similar property for its own
account.
12. Securities and Deposits. The Lender may at any time following and
during the continuance of an Event of Default, at its option, transfer to itself
or any nominee any securities constituting Collateral, receive any income
thereon and hold such income as additional Collateral or apply it to the
Obligations. Whether or not any Obligations are due, the Lender may, following
and during the continuance of an Event of Default demand, xxx for, collect, or
make any settlement or compromise which it deems desirable with respect to, the
Collateral. Regardless of the adequacy of Collateral or any other security for
the Obligations, any deposits or other sums at any time credited by or due from
the Lender to the Company may at any time be applied to or set off against any
of the Obligations then due and owing.
13. Notification to Account Debtors and Other Persons Obligated on
Collateral. If an Event of Default shall have occurred and be continuing, the
Company shall, at the request of the Lender, notify account debtors and other
persons obligated on any of the Collateral of the security interest of the
Lender in any account, chattel paper, general intangible, instrument or other
Collateral and that payment thereof is to be made directly to the Lender or to
any financial institution designated by the Lender as the Lender's agent
therefor, and the Lender may itself, if an Event of Default shall have occurred
and be continuing, without notice to or demand upon the Company, so notify
account debtors and other persons obligated on Collateral. After the making of
such a request or the giving of any such notification, the Company shall hold
any proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other Collateral received by the Company as trustee for the
Lender without commingling the same with other funds of the Company and shall
turn the same over to the Lender in the identical form received, together with
any necessary endorsements or assignments. The Lender shall apply the proceeds
of collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by the Lender to the Obligations, such proceeds to be
immediately entered after final payment in cash or other immediately available
funds of the items giving rise to them.
14. Power of Attorney.
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14.1. Appointment and Powers of Lender. The Company hereby irrevocably
constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in
the place and stead of the Company or in the Lender's own name,
for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of the Company, without notice to or
assent by the Company, to do the following:
(a) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform
Commercial Code of the State and as fully and completely as
though the Lender were the absolute owner thereof for all
purposes, and to do at the Company's expense, at any time,
or from time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon the
Collateral and the Lender's security interest therein, in
order to effect the intent of this Agreement, all as fully
and effectively as the Company might do, including, without
limitation, (i) the filing and prosecuting of registration
and transfer applications with the appropriate federal or
local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii)
upon written notice to the Company, the exercise of voting
rights with respect to voting securities, which rights may
be exercised, if the Lender so elects, with a view to
causing the liquidation in a commercially reasonable manner
of assets of the issuer of any such securities, and (iii)
the execution, delivery and recording, in connection with
any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance
or transfer with respect to such Collateral; and
(b) to the extent that the Company's authorization given in
Section 3 is not sufficient, to file such financing
statements with respect hereto, with or without the
Company's signature, or a photocopy of this Agreement in
substitution for a financing statement, as the Lender may
deem appropriate and to execute in the Company's name such
financing statements and amendments thereto and continuation
statements which may require the Company's signature.
14.2. Ratification by Company. To the extent permitted by law, the
Company hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
14.3. No Duty on Lender. The powers conferred on the Lender hereunder
are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The
Lender shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees or agents shall
be responsible to the Company for any act or failure to act,
except for the Lender's own gross negligence or willful
misconduct.
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15. Remedies. If an Event of Default shall have occurred and be continuing,
the Lender may, without notice to or demand upon the Company, declare this
Agreement to be in default, and the Lender shall thereafter have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code of the State or of any jurisdiction in which Collateral
is located, including, without limitation, the right to take possession of the
Collateral, and for that purpose the Lender may, so far as the Company can give
authority therefor, enter upon any premises on which the Collateral may be
situated and remove the same therefrom. The Lender may in its discretion require
the Company to assemble all or any part of the Collateral at such location or
locations within the jurisdictions of the Company's principal office(s) or at
such other locations as the Lender may reasonably designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Lender shall give to the
Company at least five (5) Business Days prior written notice of the time and
place of any public sale of Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Company hereby
acknowledges that five (5) Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, the Company waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of the Lender's rights hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights with respect thereto.
16. Standards for Exercising Remedies. To the extent that applicable law
imposes duties on the Lender to exercise remedies in a commercially reasonable
manner, the Company acknowledges and agrees that it is not commercially
unreasonable for the Lender (a) to fail to incur expenses reasonably deemed
significant by the Lender to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against account debtors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as the Company, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Lender against
risks of loss, collection or disposition of Collateral or to provide to the
Lender a guaranteed return from the collection or disposition of Collateral, or
(l) to the extent deemed appropriate by the Lender, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Lender in the collection or disposition of any of the Collateral. The
Company acknowledges that the purpose of this Section 16 is to provide
non-exhaustive indications of what actions or omissions by the Lender would not
be commercially unreasonable in the Lender's exercise of remedies against the
Collateral and that other actions or omissions by the Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 16. Without limitation upon the foregoing, nothing contained in this
Section 16 shall be construed to grant any rights to the Company or to impose
any duties on the Lender that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section 16.
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17. No Waiver by Lender, Etc. The Lender shall not be deemed to have waived
any of its rights upon or under the Obligations or the Collateral unless such
waiver shall be in writing and signed by the Lender. No delay or omission on the
part of the Lender in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right on any future occasion. All rights and remedies
of the Lender with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Lender deems expedient.
18. Suretyship Waivers by Company. The Company waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, the Company assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Lender may deem advisable. The Lender shall have no
duty as to the collection or protection of the Collateral or any income thereon,
nor as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 11.2. The Company further waives any and all other
suretyship defenses.
19. Marshalling. The Lender shall not be required to marshal any present or
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that it
lawfully may, the Company hereby agrees that it will not invoke any law relating
to the marshalling of collateral which might cause delay in or impede the
enforcement of the Lender's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses. The Company shall pay to the Lender
on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Lender in protecting, preserving or
enforcing the Lender's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Lender may determine, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any payments
required by Sections 9.1-608(a) (1) (C) or 9.1-615 (a) (3) of the Uniform
Commercial Code of the State, any excess shall be returned to the Company, and
the Company shall remain liable for any deficiency in the payment of the
Obligations.
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21. Overdue Amounts. Until paid, all amounts due and payable by the Company
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Credit Agreement.
22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. The
Company agrees that any suit for the enforcement of this Agreement may be
brought in the courts of the State or any federal court sitting therein and
consents to the non-exclusive Jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in the Credit Agreement. The Company hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient court.
23. Waiver of Jury Trial. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY
SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Company waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Company (i)
certifies that neither the Lender nor any representative, agent or attorney of
the Lender has represented, expressly or otherwise, that the Lender would not,
in the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Lender is a party, the Lender is relying upon, among
other things, the waivers and certifications contained in this Section 23.
24. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of the Lender and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Company acknowledges
receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Company has caused
this Agreement to be duly executed as of the date first above written.
COHESANT INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Printed: Xxxxxx Xxxxxx
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Title: Chief Financial Officer
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Accepted:
REGIONS BANK
By: /s/ Xxxxx X Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx, Vice President
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