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EXHIBIT 10.2
COLLATERAL SECURITY AGREEMENT
(For Loan Transactions)
THIS COLLATERAL SECURITY AGREEMENT (FOR LOAN TRANSACTIONS) (this
"Agreement") dated the 27th of November, 1996, is executed by XXXXXX
INDUSTRIES, INC., a Delaware corporation, authorized to do business in Texas,
whose address for notice hereunder is 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000 ("Borrower") and KBK FINANCIAL, INC., a Delaware corporation,
authorized to do business in Texas, and doing business as PII/KBK Acceptance
Corporation, whose address for notice hereunder is 2200 City Center II, 000
Xxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000 ("Secured Party").
SECTION 1. CREATION OF SECURITY INTEREST. Borrower hereby grants to
Secured Party a security interest in the property described in Section 2 of
this Agreement (the "Collateral") to secure performance and payment of (i)
those certain promissory notes (the "Notes") of even date herewith, in the
original principal amounts of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000), and THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000),
executed by Borrower, payable to the order of Secured Party, bearing interest
and being payable in the manner provided in the Notes, (ii) all renewals,
extensions, modifications and rearrangements of either of the Notes, (iii) all
obligations of Borrower under this Agreement, that certain Loan Agreement (the
"Loan Agreement") of even date herewith by and between Borrower and Secured
Party, and any related instrument or agreement, and any and all extensions,
renewals, modifications or rearrangements thereof, (iv) all obligations of
Borrower, as seller, under a Revolving Account Transfer and Purchase Agreement
(the "Batch Purchase Agreement") if, as and when executed by and between
Borrower and KBK, and any and all extensions, renewals, modifications or
rearrangements thereof, and all related instruments and agreements (all of the
foregoing described in this Section 1 is referred to herein as the "Secured
Indebtedness").
Some of the terms used herein are defined in the Loan Agreement to
which reference is hereby made for all purposes.
SECTION 2. COLLATERAL. The Collateral of this Agreement is:
All Accounts. All accounts, contract rights, rights to the
payment of money including, but not limited to, tax refund claims, insurance
proceeds, proceeds from tort claims and any rent payable due or to become due
under any rent or lease contracts (hereinafter sometimes collectively referred
to as "Accounts"), now owned or existing as well as any and all that may
hereafter arise or be acquired by Borrower, and all the proceeds and products
thereof, including without limitation, all notes, drafts, acceptances,
instruments and chattel paper arising therefrom, and all returned or
repossessed goods arising from or relating to any such accounts, or other
proceeds or products of any sale, lease, rental or other disposition of
Borrower's inventory.
All Inventory. All of Borrower's inventory, including all
goods, merchandise, raw materials, goods or work in process, finished goods and
other tangible personal property, wheresoever located, now owned or hereafter
acquired and held for sale, rent or lease or furnished or to be furnished under
contracts for service or used or consumed in Borrower's business and all
additions and accessions thereto and contracts with respect thereto and all
documents of title evidencing or representing any part thereof, and all
products and proceeds thereof. Without limitation of the foregoing, inventory
shall include all of Borrower's (i) revenue producing tools, (ii) components,
subassemblies, and expendable (replacement) parts of or for revenue producing
tools,
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(iii) revenue producing tools in production, and (iv) raw materials used to
build the assets described in the foregoing clauses (i), (ii) and (iii).
All Equipment. All equipment of every nature and description
whatsoever now owned or hereafter acquired by Borrower including all
appurtenances and additions thereto and substitutions therefor, wheresoever
located, including all tools, parts and accessories used in connection
therewith. As used herein, the term "equipment" shall not include inventory as
herein defined.
General Intangibles. All general intangibles including, but
not limited to, goodwill, engineering drawings and customer lists, and other
personal property now owned or hereafter acquired by Borrower other than goods,
accounts, chattel paper, documents and instruments.
Chattel Paper. All of Borrower's interest under chattel
paper, lease agreements and other instruments or documents, whether now
existing or owned by Borrower or hereafter arising or acquired by Borrower,
evidencing both a debt and security interest in or lease of specific goods.
Instruments. All of Borrower's now owned or existing as well
as hereafter acquired or arising instruments (other than stock of the
Subsidiaries) and documents.
Rental Agreements. Without limiting the foregoing, all of the
Borrower's right, title and interest in and to the following whether now
existing or hereafter arising or entered into: all agreements (the "Rental
Agreements") entered into by Borrower, as lessor, for the lease, rental or
conditional sale of inventory or equipment, or both (together with all monies
and claims for monies which may arise out of the Rental Agreements, all claims,
rights, powers, privileges and remedies of Borrower thereunder and, to the
extent not included in the foregoing, any and all proceeds of any and all of
the foregoing).
Residuals. All sums due to Borrower from Secured Party
by way of advances, reserves, residuals, and any other amounts so due at any
time.
Other. All sums now or hereafter on deposit in any deposit
account maintained by Secured Party or a third party as agent or bailee for KBK
for the deposit and collection of remittance drafts and other proceeds of
Collateral, and all money received from any source and held or due to Borrower
by Secured Party, and all money heretofore delivered or which shall hereafter
be delivered to or come into the possession, custody or control of Secured
Party in any manner or for any purpose whatever during the existence of this
Agreement, and whether held as reserves or a general or special account, or
otherwise, including, without limitation, all rights, title and interest of
Borrower in and to Deposit Account No. _________ at Bank One Texas, N.A.,
Houston, Texas.
The term "Collateral" as used in this Agreement shall mean and
include, and the security interest shall cover, all of the property described
in this Section 2, as well as any accessions, additions and attachments thereto
and the proceeds and products thereof, including without limitation, all cash,
general intangibles, accounts, inventory, equipment, fixtures, notes, drafts,
acceptances, securities, instruments, chattel paper, insurance proceeds payable
because of loss or damage, or other property, benefits or
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rights arising therefrom, and in and to all returned or repossessed goods
arising from or relating to any of the property described herein or other
proceeds of any sale, rental, lease or other disposition of such property.
All terms not otherwise defined herein or defined in the Loan
Agreement and which are defined in the Uniform Commercial Code adopted in the
State of Texas in effect on the date of execution hereof, shall have the
meaning ascribed to them in the Uniform Commercial Code adopted in the State of
Texas in effect as of the date of execution hereof and set forth in any
amendment to the Uniform Commercial Code adopted in the State of Texas to
become effective after the date of execution hereof.
SECTION 3. PAYMENT OF OBLIGATIONS.
3.1 Direct Obligations. Borrower shall pay to Secured Party all
amounts owing under the Notes in the manner specified in the Notes and shall
pay to Secured Party any sum or sums due or which may become due pursuant to
any other document, agreement or instrument evidencing the Secured
Indebtedness.
3.2 Expenses. Borrower shall pay to Secured Party on demand all
expenses and expenditures, including reasonable attorneys' fees and other legal
expenses incurred or paid by Secured Party in exercising or protecting its
interests, rights and remedies under this Agreement, plus interest thereon at
the maximum non-usurious rate permitted by applicable law with respect to
Borrower.
3.3 Acceleration. Borrower shall pay immediately, without notice,
the entire unpaid Secured Indebtedness to Secured Party upon the occurrence of
an Event of Default hereunder and/or the acceleration of the Secured
Indebtedness as provided for in the Loan Agreement.
SECTION 4. BORROWER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Borrower represents, warrants and agrees that:
4.1 Valid Accounts. Each Account will represent the valid and
legally enforceable indebtedness of a bona fide account debtor arising from the
sale or lease of goods or rendition of services by Borrower, will be subject to
no setoffs, counterclaims or defenses; the amount shown as to each Account on
Borrower's books will be the true and undisputed amount owing and unpaid
thereon, payable in full at the time referred to in the invoice or, if no time
is specified, within thirty (30) days from the date of the particular invoice,
and Borrower has no knowledge of any fact or circumstance that would impair the
validity or enforceability of any Account.
4.2 Title: No Financing Statement. Except for (i) security
interests granted hereby and under the Batch Purchase Agreement, (ii) any other
security interests in favor of Secured Party, and (iii) Permitted Liens,
absolute title to all the Collateral, free and clear of all liens, security
interests and encumbrances, is, or at the time of acquisition thereof will be,
vested in Borrower. The liens and security interests in the Collateral in favor
of Secured Party shall be first priority, perfected liens and security
interest. No financing statement or security agreement covering any of the
Collateral or its proceeds is on file in any public office, except as herein
set forth.
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4.3 Information. All information supplied and statements made by
Borrower or any guarantor of all or any part of the Secured Indebtedness in any
financial, credit or accounting statement or application for credit prior to,
contemporaneously with or subsequent to the execution of this Agreement are and
shall be true, correct, complete, valid and genuine.
4.4 Place of Business: Records: Inspections. The chief executive
office of Borrower is the address shown on the first page of this Agreement.
Borrower will immediately notify Secured Party in writing of any change in
Borrower's chief executive office. Borrower will (i) keep such books and
records pertaining to the Collateral at such chief executive office and at such
office or offices of Borrower as shall be approved in writing by Secured Party;
(ii) permit Secured Party or its officers, agents, attorneys or accountants at
any time to inspect the Collateral and the books and records of Borrower
pertaining to the Collateral, and assist in such inspections; and (iii) furnish
to Secured Party such information and reports regarding the Collateral as
Secured Party may from time to time require.
4.5 Collateral Locations. (a) To the best of Borrower's
knowledge, the Borrower has possession and control of its inventory and
equipment, except for (i) inventory rented, leased, subleased, consigned for
sale or rental, sold by conditional sale or on demonstration to any customer or
sales agent in the ordinary course of the Borrower's business, (ii) inventory
or equipment in transit in the ordinary course of the Borrower's business,
(iii) inventory or equipment under repair or maintenance by parties other than
the Borrower, (iv) inventory and equipment in the possession of persons who are
providing specialized fabrication of component parts in the ordinary course of
the Borrower's business and (v) equipment at store points and sales locations
owned or leased by Borrower and leased or subleased to third parties or
otherwise not occupied by the Borrower.
(b) To the best of Borrower's knowledge, the list attached hereto
as Exhibit "A" accurately and completely describes all current locations of any
and all inventory and equipment owned by Borrower except for the inventory and
equipment described in the foregoing subclauses 4.5(a)(i) through (v).
(c) Commencing on the date hereof, Revenue Producing Assets with
an original cost basis of not less that $12,000,000.00 will be located at all
times in Eligible Jurisdictions (as hereinafter defined). For purposes of this
clause 4.5(c), the term "Revenue Producing Assets" shall include Borrower's
revenue producing tools, components, subassemblies, and expendable
(replacement) parts of or for revenue producing tools, revenue producing tools
in production, and raw materials sued to build the foregoing assets, but shall
not include any assets (other than those assets for which the Borrower has
properly complied with the filing and notice requirements of Section 9.115 of
the UCC) sold or delivered on a "sale on approval" or a "sale or return"(as
each of those terms are defined in Section 2.326 of the UCC), or on
consignment, on memorandum, or on a guaranteed sale basis (collectively, the
"Consignment Assets"), and the original cost basis of any of such Consignment
Assets shall not be included in the calculation of the original cost basis of
the Revenue Producing Assets pursuant to this clause 4.5(c). All of Borrower's
equipment that are based in the United States of America will be located at all
times in Eligible Jurisdictions (except for equipment described in subclauses
4.5(a)(ii), 4.5(a)(iii), and 4.5(a)(iv) above, which, to the extent
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they are not located in Eligible Jurisdictions, shall at no time constitute a
material portion of the Borrower's equipment based in the United States). The
Term "Eligible Jurisdictions" means at any time with respect to any Collateral
(i) the states listed on Exhibit B attached hereto or, if any such state is
designated on Exhibit B as a "Non-Central Filing State," the counties or
parishes listed on Exhibit B and (ii) any other jurisdiction in the United
States in which Collateral is located so long as Borrower delivers to Secured
Party written notice that Collateral is, or is to be, located in that
jurisdiction within sufficient time to permit Secured Party to continue its
security interest in such Collateral on a continuous basis and Borrower
provides to Secured Party financing statements or other documents reasonably
required by Secured Party to perfect a first priority security interest
(subject only to Permitted Liens) in such Collateral.
4.6 Notice to Clients. At any time and from time to time upon
Secured Party's request after the acceleration of the Secured Indebtedness,
Borrower will give such notice in writing as Secured Party may require to any
or all account debtors and lessees indebted on all or any of the Accounts and
Rental Agreements and, if Secured Party shall so request, deliver to Secured
Party copies of any and all such notices.
4.7 Fees and Assessments; No Encumbrances. Borrower shall
promptly pay when due all taxes, assessments, license fees, registration fees,
and governmental charges levied or assessed against Borrower or with respect to
the Collateral or any part thereof except for those being contested in good
faith by appropriate proceedings and against which Borrower has set up adequate
reserves in accordance with GAAP. Borrower shall keep the Collateral,
including the proceeds from any disposition thereof, free from liens,
encumbrances, and security interests. Borrower will not pledge, mortgage or
otherwise encumber, or create or suffer a security interest to exist in, any of
the Collateral to or in favor of anyone other than Secured Party or under the
Batch Purchase Agreement.
4.8 Additional Documentation. Borrower will sign and execute
alone or with Secured Party any financing statement or other document or
procure any document, and pay all connected costs, necessary to create or
perfect the security interests, rights and remedies intended to be created by
this Agreement under the laws of each jurisdiction where any of the Collateral
may be located. Borrower shall furnish, at Borrower's sole cost and expense, a
waiver agreement in form and substance satisfactory to Secured Party, of all
liens of any landlord relating to any portion of the Collateral that is or that
may be located on leased premises.
4.9 Protective Action. Borrower will, at its own expense, do,
make, procure, execute and deliver all acts, things, writings and assurances as
Secured Party may at any time request to protect, assure or enforce its
interests, rights and remedies created by, provided in or emanating from this
Agreement.
4.10 Insurance. Borrower will have and maintain or cause to be
maintained insurance at all times with respect to all its properties (including
the Collateral) against risks of fire, theft and such other risks as are
customary in Borrower's industry and consistent with good business practices.
4.11 Accounts as Proceeds. All Accounts and Rental Agreements that
are proceeds of Inventory shall be subject to the security interest granted
hereby and all of the other terms and provisions hereof.
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4.12 Condition. Borrower shall maintain, service and repair the
Collateral so as to keep it in good working order and condition in all material
respects. Borrower shall replace within a reasonable time all parts that may
be worn out, lost, destroyed or otherwise rendered unfit for use, with
appropriate replacement parts except that tools which, in the ordinary course
of its business, Borrower determines to be worn out or obsolete may be sold as
scrap. Borrower shall obtain and maintain in good standing at all times all
applicable material permits, licenses, registrations and certificates relating
to the Collateral in all material respects.
4.13 No Transfer or Pledge. Except as otherwise provided herein or
in the Loan Agreement with respect to inventory, Borrower shall not, without
the prior written consent of Secured Party, sell, assign, transfer, lease,
charter, encumber, pledge, mortgage, hypothecate or dispose of the Collateral,
or any part thereof, or interest therein, or offer or contract to do any of the
foregoing except for sales and dispositions of Collateral which is worn out,
obsolete or not necessary to Borrower's operations and which occur in the
ordinary course of Borrower's business.
4.14 Notices and Reports. Borrower shall promptly notify Secured
Party of any additions or changes to Exhibit A hereto. Borrower shall furnish
such other reports, information and data regarding the Collateral and such
other matters as Secured Party may reasonably request from time to time.
4.15 Protection of Collateral. Secured Party, at its option, at
any time before or after the occurrence and during the continuance of an Event
of Default, but without any obligation whatsoever to do so, may (a) discharge
taxes, claims, charges, liens, security interests, assessments or other
encumbrances of any and every nature whatsoever (other than Permitted Liens) at
any time levied, placed upon or asserted against the Collateral, or any portion
thereof, (b) place and pay for insurance on the Collateral, or any portion
thereof, to the extent such insurance is required by the Loan Agreement,
including insurance that only protects Secured Party's interest, (c) pay for
the repair, improvement, testing, maintenance and preservation of the
Collateral, or any portion thereof, (d) pay any filing, recording,
registration, licensing or certification fees or other fees and charges related
to the Collateral, or any portion thereof, or (e) take any other action to
preserve and protect the Collateral, or any portion thereof, and Secured
Party's rights and remedies under this Agreement as Secured Party may deem
necessary or appropriate. Borrower agrees that Secured Party shall have no
duty or obligation whatsoever to take any of the foregoing actions. Borrower
agrees to promptly reimburse Secured Party upon demand for any payment made or
any expense incurred by the Secured Party pursuant to this authorization. These
payments and expenditures, together with interest thereon from date incurred
until paid by Borrower accruing at a rate equal to the rate then being paid by
the Borrower with respect to loans made pursuant to the Loan Agreement, which
Borrower agrees to pay, shall constitute additional Obligations and shall be
secured by and entitled to the benefits of this Agreement.
4.16 Use of Inventory. Unless and until the privilege of Borrower
to use inventory in the ordinary course of Borrower's business is revoked by
Secured Party upon the occurrence and during the continuance of an event of
default, Borrower may use the inventory in any manner not consistent with this
Agreement, may sell or lease that part of the Collateral consisting of
inventory provided that all such sales and leases are in the ordinary course of
business, and may use and consume any raw materials or supplies that are
necessary in order to carry on Borrower's business. A sale in the
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ordinary course of business does not include a transfer in partial or total
satisfaction of a debt.
SECTION 5. EVENTS OF DEFAULT. Borrower shall be in default under
this Agreement (herein called an "Event of Default") upon the happening of any
of the following events:
(1) The occurrence of a default or an event of default
under the Notes;
(2) The occurrence of a default or an Event of Default
under the Loan Agreement or the Batch Purchase Agreement;
(3) The default by Borrower in the punctual performance
of any of the obligations, covenants, terms or provisions contained or referred
to in this Agreement; or
(4) Any warranty, representation, or statement made by or
on behalf of Borrower in connection with this Agreement, the Notes, the Loan
Agreement or the Batch Purchase Agreement proves to have been false in any
material respect when made or furnished or becomes materially false while any
of the Secured Indebtedness is outstanding.
SECTION 6. SECURED PARTY'S RIGHTS AND REMEDIES.
6.1 Rights Exclusive of an Event of Default.
(a) Secured Party shall at all times have the right to
apply the proceeds of any of the Collateral as set forth herein immediately
upon receipt or collection of such proceeds, including the express right of
setoff against any sums owed by or held by Secured Party to or for Borrower.
(b) Secured Party shall not be required to take any steps
necessary to preserve the rights of the Collateral, except as required by law.
Secured Party's duty with respect to the Collateral shall be solely to use
reasonable care in the custody and preservation of Collateral in Secured
Party's possession. Borrower agrees Secured Party shall have no responsibility
for the operation or condition of the Collateral including, without limitation,
any items acquired with the proceeds of the Notes.
(c) Secured party shall have the rights and remedies of a
secured party under the Texas Business and Commerce Code and under the other
applicable laws of each state having jurisdiction over the Collateral or any
part thereof. The rights and remedies of Secured Party hereunder are
cumulative, and the exercise of any one or more of the rights or remedies
provided for herein shall not be construed as a waiver of any of the other
rights or remedies of Secured Party. At its option, Secured Party may exercise
any and all rights and remedies available to it under the Notes and the Loan
Agreement.
(d) Borrower agrees that, in performing any act under
this Agreement, time shall be of the essence and Secured Party's acceptance of
a partial or delinquent payment or payments, or the failure of Secured Party to
exercise any right or remedy,
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shall not be a waiver of any obligation of Borrower or any right of Secured
Party or constitute a waiver of any other similar default subsequently
occurring.
6.2 Rights in Event of Default.
(a) Upon the occurrence of an Event of Default hereunder,
and at any time thereafter, in addition to the rights granted pursuant to
Section 6.1 hereof, but subject to the provisions of the Notes, Secured Party
may declare the Secured Indebtedness immediately due and payable. Upon the
acceleration of the Secured Indebtedness, Secured Party shall have the right to
sell, lease or otherwise dispose of any or all of the Collateral and the right
to take possession of the Collateral, and for that purpose Secured Party may
enter upon any premises on which the Collateral or any part thereof may be
situated and remove the Collateral or books and records evidencing same, or may
require Borrower to assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party which is reasonably
convenient to both parties. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Secured Party will send Borrower reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
other disposition thereof is to be made. The requirement of sending reasonable
notice shall be met if such notice is mailed, postage prepaid, to Borrower at
the address designated in this Agreement at least five (5) days before the time
of the sale or disposition. Expenses of retaking, holding, preparing for sale,
selling or the like shall include Secured Party's attorneys' fees and legal
expenses, plus interest thereon at the maximum non-usurious rate permitted by
applicable law with respect to Borrower and shall constitute part of the
Secured Indebtedness. Borrower shall remain liable for any deficiency.
(b) Secured Party may, but is not obligated to, exercise
at any time and from time to time after the acceleration of the Secured
Indebtedness, in its name or in the name of Borrower, all or any of Borrower's
rights including, but not limited to, the following powers, with respect to all
or any of the Collateral:
(1) to instruct account debtors and lessees to
pay Accounts and Rental Agreements directly to Secured Party or to a
post office box address over which Secured Party has control;
(2) to demand, xxx for, collect, receive and give
acquittance for any and all moneys due or to become due upon or by
virtue thereof;
(3) to receive, take, execute, sign, endorse,
transfer, assign and deliver any and all checks, notes, drafts,
documents and other negotiable and non-negotiable instruments and
chattel paper taken or received by Secured Party in connection
therewith;
(4) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto;
(5) to sell, transfer, assign or otherwise deal
in or with the Collateral or the proceeds or avails thereof or the
relative goods, as fully and effectually as if Secured Party were the
absolute owner thereof; and
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(6) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with reference
thereto;
provided, however, the exercise by Secured Party of or failure to so exercise
any such authority shall in no manner affect Borrower's liability to Secured
Party hereunder or under the Notes or under any other document, agreement or
instrument evidencing or securing any of the Secured Indebtedness, and provided
further that Secured Party shall be under no obligation or duty to exercise any
of the powers hereby conferred upon it and it shall be without liability for
any act or failure to act in connection with any of the Collateral.
(c) Any amounts held, realized or received by Secured
Party from any sale or other disposition of the Collateral or any part thereof,
and all amounts received by Secured Party pursuant to the collection of any
Accounts, shall be applied by Secured Party in the following order:
(1) First, to all costs, expenses and liabilities
of Secured Party (including attorneys' fees and expenses) incurred in
connection with the custody, preservation, use or operation of the
Collateral; the sale of, collection from or other realization upon
Collateral; and the exercise of Secured Party's rights under this
Agreement;
(2) Second, to the payment of the Secured
Indebtedness and/or the protection of Secured Party's interest in the
Collateral;
(3) Third, to the payment or other satisfaction
of any other liens or encumbrances upon any of the Collateral;
(4) Fourth, to Borrower or its successors or
assigns, or such other party as may be legally entitled thereto, or as
a court of competent jurisdiction may direct.
(d) Secured Party may remedy any default and may waive
any default without waiving the default remedied or without waiving any other
prior or subsequent default.
(e) SECURED PARTY MAY ENFORCE ITS RIGHTS UNDER THIS
AGREEMENT WITHOUT RESORT TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING, AND
BORROWER EXPRESSLY WAIVES, RENOUNCES AND KNOWINGLY RELINQUISHES ANY LEGAL RIGHT
WHICH MIGHT OTHERWISE REQUIRE SECURED PARTY TO ENFORCE ITS RIGHTS BY JUDICIAL
PROCESS. IN SO PROVIDING FOR A NON JUDICIAL REMEDY, BORROWER RECOGNIZES AND
CONCEDES THAT SUCH A REMEDY IS CONSISTENT WITH THE USAGE OF THE TRADE, IS
RESPONSIVE TO COMMERCIAL NECESSITY AND IS THE RESULT OF BARGAINING AT ARMS
LENGTH. NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT BORROWER OR SECURED
PARTY FROM RESORTING TO JUDICIAL PROCESS AT EITHER PARTY'S OPTION.
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SECTION 7. ADDITIONAL AGREEMENTS.
7.1 Parties. Secured Party", "Borrower", and "account debtor" as
used in this Agreement include all successors, assigns, legal representatives,
heirs, executors and receivers, of those parties.
7.2 Section Headings. The section headings appearing in this
Agreement have been inserted for convenience only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this Agreement.
7.3 Use of Copies. Any carbon, photographic or other reproduction
of this Agreement or any financing statement signed by Borrower is sufficient
as a financing statement for all purposes, including without limitation, filing
in any state as may be permitted by the provisions of the Uniform Commercial
Code of such state.
7.4 Defined Terms. Terms used in this Agreement which are defined
in the Texas Business and Commerce Code are used with the meanings as therein
defined.
7.5 Gender. The use of any gender in this Agreement shall be
applicable to all genders.
7.6 Severability. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable, such provision shall be fully severable,
and the remaining provisions of this Agreement shall be in full force and
effect.
7.7 Applicable Law: Place of Payment. The law governing this
Agreement shall be that of the State of Texas, and all payments and obligations
shall be made and performed in Fort Worth, Tarrant County, Texas, unless
otherwise agreed.
7.8 Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered, or sent by
registered or certified mail, to the addresses set forth on the first page of
this Agreement. The date of personal delivery, or the date of mailing, shall be
deemed to be the date of notice. Any party may, by proper written notice
hereunder, change the address to which notices to such party shall thereafter
be sent.
7.9 Assignment by Secured Party. This Agreement and Secured
Party's rights hereunder may be assigned by Secured Party, and in any such case
the assignee shall be entitled to all of the rights, privileges and remedies
granted in this Agreement to Secured Party.
7.10 Waiver of Rights. Borrower waives any right to require
Secured Party to file suit against any other party or take any other action
against such other party or such other party's property as a prerequisite to
Secured Party's taking any action or bringing any suit against Borrower under
this Agreement.
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7.11 Savings Clause. The usury savings clause provided in Section
11.F of the Loan Agreement is incorporated by reference into this Agreement and
is made a part hereof for all purposes; it being agreed that all rights and
remedies of Secured Party hereunder are subject to and entitled to the benefit
of the terms of such usury savings clause.
EXECUTED AND EFFECTIVE as of the date first set forth above.
BORROWER:
XXXXXX INDUSTRIES, INC.
By:
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Name:
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Title:
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Exhibits
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Exhibit A - Location of Collateral
Exhibit B - States in Which Collateral is Located
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