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EXHIBIT 10.20
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of August 5,
1998, between UNITED PETROLEUM CORPORATION ("UPET"), a corporation organized and
existing under the laws of Delaware, CALIBUR SYSTEMS, INC. (Calibur"), a
corporation organized and existing under the laws of Tennessee, and
XXXXXXX-UNITED PETROLEUM CORPORATION ("Xxxxxxx-United"), a corporation organized
and existing under the laws of Kentucky (each an "Assignor" and, collectively,
the "Assignors")and INFINITY INVESTORS LIMITED, a Nevis West Indies corporation
(the "Lender"), a party to the Amended, Restated and Consolidated Credit
Agreement, dated as of August 5, 1998, among each of the Assignors and the
Lender (as modified, supplemented or amended from time to time, the "Credit
Agreement"). Unless otherwise defined herein, terms used herein and defined in
the Credit Agreement shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, UPET, Xxxxxxx-United and the Lender are parties to
that certain Security Agreement dated as of April 15, 1998 (the "Original
Security Agreement");
WHEREAS, each of the Assignors desire to incur the
Consolidated Loans under the Credit Agreement;
WHEREAS, each of the Assignors and Lender collectively desire
to amend and restate the Original Security Agreement in connection with the
closing of the Credit Agreement;
WHEREAS, it is a condition precedent to the incurrence of
Loans under the Credit Agreement that each of the Assignors shall has executed
and delivered to the Lender this Agreement; and
WHEREAS, each of the Assignors desires to execute this
Agreement to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits to each of
the Assignors, the receipt and sufficiency of which are hereby acknowledged,
each of the Assignors hereby makes the following representations and warranties
to the Lender and hereby covenants and agrees with the Lender as follows:
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SECTION 1. SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of its Obligations
(all capitalized terms used herein and defined in Section 9.1 shall be used
herein as so defined), each of the Assignors does hereby sell, assign and
transfer unto the Lender, and does hereby grant to the Lender a continuing
security interest of first priority in, all of the right, title and interest of
each of such Assignor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable;
(ii) all Contracts, together with all Contract Rights arising thereunder; (iii)
all Inventory; (iv) all Equipment; (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
businesses of each of the Assignors symbolized by the Marks; (vi) all Patents
and Copyrights; (vii) all computer programs of each of the Assignors and all
intellectual property rights therein and all other proprietary information of
each of the Assignors, including, but not limited to, trade secrets; (viii) the
Cash Collateral Account and all monies, securities and instruments deposited or
required to be deposited in the Cash Collateral Account; (ix) all other Goods,
General Intangibles, Chattel Paper, Documents and Instruments (other than
Pledged Stock); and (x) all Proceeds and products of any and all of the
foregoing (all of the above, collectively, the "Collateral").
(b) The security interest of the Lender under this Agreement
extends to all Collateral of the kind described in preceding clause (a) which
each of the Assignors may acquire at any time during the continuation of this
Agreement.
1.2. Power of Attorney. Each of the Assignors hereby
constitutes and appoints the Lender its true and lawful attorney, irrevocably,
with full power after the occurrence of an Event of Default (in the name of each
of the Assignors or otherwise) to act, require, demand, receive, compound and
give acquittance for any and all monies and claims for monies due or to become
due to each of the Assignors under or arising out of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings which the Lender may
deem to be necessary or advisable in the premises, which appointment as attorney
is coupled with an interest.
SECTION 2. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each of the Assignors represents, warrants and covenants,
which representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by each of the Assignors to the Lender hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Lender pursuant to this Agreement in and to the Collateral
constitutes a valid and enforceable perfected security interest therein superior
and prior to the rights of all other Persons therein and subject to no other
Liens (except that the Collateral may be subject to Liens permitted under
Section 7.1 of the Credit Agreement) and is entitled to all the
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rights, priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests.
2.2. No Liens. Each of the Assignors is, and as to Collateral
acquired by them from time to time after the date hereof each of the Assignors
will be, the owners of all Collateral free from any Lien or other right, title
or interest of any Person (other than Liens created hereby or permitted under
Section 7.1 of the Credit Agreement), and each of the Assignors shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Lender.
2.3. Other Financing Statements. There is no financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) covering or purporting to cover any interest of any kind in
the Collateral except as disclosed in Annex A and so long as any of the
Obligations remain unpaid, none of the Assignors will execute or authorize to be
filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by any of the
Assignors.
2.4. Chief Executive Office; Records. The chief executive
office of each of the Assignors is located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx X000,
Xxxxxxxxx, Xxxxxxxxx 00000 except Calibur which is at 0000 Xxxxx Xxxxxxxx,
Xxxxxxxxx Xxxxxxxxx 00000. Each of the Assignors will not move their chief
executive office except to such new location as any of the Assignors may
establish in accordance with the last sentence of this Section 2.4. The
originals of all documents evidencing all Receivables and Contract Rights of the
Assignors and the only original books of account and records of the Assignors
relating thereto are, and will continue to be, kept at such chief executive
office or at the locations disclosed in Annex B, or at such new locations as the
Assignors may establish in accordance with the last sentence of this Section
2.4. All Receivables and Contract Rights of the Assignors are, and will continue
to be, maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, such office locations shown
above, or such new locations as the Assignors may establish in accordance with
the last sentence of this Section 2.4. None of the Assignors shall establish a
new location for such offices until (i) such assignor shall have given to the
Lender not less than 45 days' prior written notice of its intention so to do,
clearly describing such new location and providing such other information in
connection therewith as the Lender may reasonably request and (ii) with respect
to such new location, they shall have taken all action, satisfactory to the
Lender, to maintain the security interest of the Lender in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.5. Location of Inventory and Equipment. (a) All Inventory
and Equipment held on the date hereof by any of the Assignors is located at one
of the locations shown on Annex C. Each of the Assignors agrees that (i) all
Inventory and Equipment now held or subsequently acquired by any of them shall
be kept at (or shall be in transport to) any one of the locations shown on Annex
C, or such new location as any of the Assignors may establish in accordance with
the last sentence of this Section 2.5. Each of the Assignors may establish a new
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location for Inventory and Equipment only if (i) it shall have given to the
Lender prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Lender may reasonably request and (ii) with respect to such new location, they
shall have taken all action reasonably satisfactory to the Lender to maintain
the security interest of the Lender in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to
each of the Assignors and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of each of the Assignors
contained herein, in the Credit Agreement and otherwise in writing in connection
herewith or therewith.
SECTION 3. SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT
RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each of the Assignors shall be deemed to
have represented and warranted that such Receivables, and all records, papers
and documents relating thereto (if any) are genuine and in all respects what
they purport to be, and that all papers and documents (if any) relating thereto
(i) will represent the genuine, legal, valid and binding obligation of the
account debtor evidencing indebtedness unpaid and owed by the respective account
debtor arising out of the performance of labor or services or the sale or lease
and delivery of the merchandise listed therein, or both, (ii) will be the only
original writings evidencing and embodying such obligation of the account debtor
named therein (other than copies created for general accounting purposes), (iii)
will evidence true and valid obligations, enforceable in accordance with their
respective terms and (iv) will be in compliance and will conform with all
applicable federal, state and local laws and applicable laws of any relevant
foreign jurisdiction.
3.2. Maintenance of Records. Each of the Assignors will keep
and maintain at its own cost and expense satisfactory and complete records of
its Receivables and Contracts, including, but not limited to, the originals of
all documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and each of the Assignors will make the same available
to the Lender for inspection, at such Assignor's own cost and expense, at any
and all reasonable times upon demand. Each of the Assignors shall, at its own
cost and expense, deliver all tangible evidence of its Receivables and Contract
Rights (including, without limitation, all documents evidencing the Receivables
and all Contracts) and such books and records to the Lender or to its
representatives (copies of which evidence and books and records may be retained
by each of the Assignors) at any time upon its demand. If the Lender so directs,
each of the Assignors shall legend, in form and manner reasonably satisfactory
to the Lender, the Receivables and Contracts, as well as books, records and
documents of each of the Assignors evidencing or pertaining to the Receivables
or Contracts with an appropriate reference to the fact that the Receivables and
Contracts have been assigned to the Lender and that the Lender has a security
interest therein.
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3.3. Direction to Account Debtors; Contracting Parties; etc.
Each of the Assignors agrees (i) to cause all payments on account of the
Receivables and Contracts to be made directly to one of the Cash Collateral
Accounts and (ii) that the Lender may, at its option, directly notify the
obligors with respect to any Receivables and/or under any Contracts to make
payments with respect thereto as provided in preceding clause (i). Without
notice to or assent by the Assignors, the Lender may apply any or all amounts
then in, or thereafter deposited in, any one of the Cash Collateral Accounts in
the manner provided in Section 7.4 of this Agreement. The costs and expenses
(including attorneys' fees) of collection, whether incurred by any of the
Assignors or the Lender, shall be borne by the Assignors.
3.4. Modification of Terms; etc. None of the Assignors shall
rescind or cancel any indebtedness evidenced by any Receivable or under any
Contract, or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable or
Contract, or interest therein, without the prior written consent of the Lender,
except as permitted by Section 3.5. Each of the Assignors will duly fulfill all
obligations on their part to be fulfilled under or in connection with the
Receivables and Contracts and will do nothing to impair the rights of the Lender
in the Receivables or Contracts.
3.5. Collection. Each of the Assignors shall endeavor to cause
to be collected from the account debtor named in each of its Receivables or
obligor under any Contract, as and when due (including, without limitation,
amounts which are delinquent, such amounts to be collected in accordance with
generally accepted lawful collection procedures) any and all amounts owing under
or on account of such Receivable or Contract, and apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Receivable or under such Contract, except that, prior to the occurrence of an
Event of Default, each of the Assignors may allow in the ordinary course of
business as adjustments to amounts owing under its Receivables and Contracts (i)
an extension or renewal of the time or times of payment, or settlement for less
than the total unpaid balance, which such Assignor finds appropriate in
accordance with sound business judgment and (ii) a refund or credit due as a
result of returned or damaged merchandise or improperly performed services. The
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by any of the Assignors or the Lender, shall be
borne by the Assignors.
3.6. Instruments. If any of the Assignors own or acquire any
Instrument, such Assignor will within 10 days notify the Lender thereof, and
upon request by the Lender promptly deliver such Instrument to the Lender
appropriately endorsed to the order of the Lender as further security hereunder.
3.7. Further Actions. Each of the Assignors will, at their own
expense, make, execute, endorse, acknowledge, file and/or deliver to the Lender
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and
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other property or rights covered by the security interest hereby granted, as the
Lender may reasonably require.
SECTION 4. SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each of the
Assignors represents and warrants that it is the true and lawful exclusive owner
of the Marks listed as such in Annex D and that such listed Marks constitute all
the marks registered in the United States Patent and Trademark Office that each
of the Assignors now own or use in connection with their business. Each of the
Assignors represents and warrants that it owns or is licensed to use all Marks
that it uses. Each of the Assignors further warrants that it is aware of no
third party claim that any aspect of the Assignor's present or contemplated
business operations infringe or will infringe any Xxxx.
4.2. Licenses and Assignments. Each of the Assignors hereby
agrees not to divest itself of any right under a Xxxx absent prior written
approval of the Lender.
4.3. Infringements. Each of the Assignors agrees, promptly
upon learning thereof, to notify the Lender in writing of the name and address
of, and to furnish such pertinent information that may be available with respect
to, any party who may be infringing or otherwise violating any of such
Assignor's rights in and to any significant Xxxx, or with respect to any party
claiming that the Assignor's use of any significant Xxxx violates any property
right of that party. Each of the Assignors further agrees, unless otherwise
directed by the Lender, diligently to prosecute any Person infringing any
significant Xxxx.
4.4. Preservation of Marks. Each of the Assignors agrees to
use its significant Marks in interstate commerce during the time in which this
Agreement is in effect, sufficiently to preserve such Marks as trademarks or
service marks registered under the laws of the United States.
4.5. Maintenance of Registration. Each of the Assignors shall,
at its own expense, diligently process all documents required by the Trademark
Act of 1946, 15 U.S.C. Sections 1051 et seq. to maintain trademark registration,
including, but not limited to, affidavits of use and applications for renewals
of registration in the United States Patent and Trademark Office for all of its
Marks pursuant to 15 U.S.C. Sections 1058(a), 1059 and 1065, and shall pay all
fees and disbursements in connection therewith, and shall not abandon any such
filing of affidavit of use or any such application of renewal prior to the
exhaustion of all administrative and judicial remedies without prior written
consent of the Required Lender. Each of the Assignors agrees to notify the
Lender six months prior to the dates on which the affidavits of use or the
applications for renewal registration are due that the affidavit of use or the
renewal are being processed.
4.6. Future Registered Marks. If any xxxx registration issues
hereafter to any of the Assignors as a result of any application now or
hereafter pending before the United States Patent and Trademark Office, within
30 days of receipt of such certificate such Assignors shall deliver a copy of
such certificate, and a grant of security in such xxxx, to the Lender,
confirming
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the grant thereof hereunder, the form of such confirmatory grant to be
substantially the same as the form hereof.
4.7. Remedies. If an Event of Default shall occur and be
continuing, the Lender may, by written notice to the Assignors, take any or all
of the following actions: (i) declare the entire right, title and interest of
each of the Assignors in and to each of the Marks, together with all trademark
rights and rights of protection to the same, vested, in which event such rights,
title and interest shall immediately vest, in the Lender and the holders of the
Notes, in which case each of the Assignors agrees to execute an assignment in
form and substance satisfactory to the Lender of all its rights, title and
interest in and to the Marks to the Lender and the holders of the Notes; (ii)
take and use or sell the Marks and the goodwill of such Assignor's businesses
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; and
(iii) direct each of the Assignors to refrain, in which event each of the
Assignors shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Lender, change such Assignor's corporate
names to eliminate therefrom any use of any Xxxx and execute such other and
further documents that the Lender may request to further confirm this and to
transfer ownership of the Marks and registrations and any pending trademark
application in the United States Patent and Trademark Office to the Lender.
SECTION 5. SPECIAL PROVISIONS CONCERNING PATENTS AND
COPYRIGHTS
5.1. Additional Representations and Warranties. Each of the
Assignors represents and warrants that it is the true and lawful exclusive owner
of all rights in the Patents listed in Annex E and in the Copyrights listed in
Annex F, that said Patents constitute all the U.S. patents and applications for
U.S. patents that each of the Assignors now owns and that said Copyrights
constitute all the U.S. copyrights that each of the Assignors now owns. Each of
the Assignors represents and warrants that it owns or is licensed to practice
under all Patents and Copyrights that it now owns, uses or practices under. Each
of the Assignors further warrants that it is aware of no third party claim that
any aspect of such Assignor's present or contemplated business operations
infringes or will infringe any Patent or any Copyright.
5.2. Licenses and Assignments. Each of the Assignors hereby
agrees not to divest itself of any right under a Patent or Copyright absent
prior written approval of the Lender.
5.3. Infringements. Each of the Assignors agrees, promptly
upon learning thereof, to furnish the Lender in writing with all pertinent
information available to such Assignors with respect to any infringement or
other violation of such Assignor's rights in any significant Patent or
Copyright, or with respect to any claim that practice of any significant Patent
or Copyright violates any property right of those parties. Each of the Assignors
further agrees, absent direction of the Lender to the contrary, diligently to
prosecute any Person infringing any significant Patent or Copyright.
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5.4. Maintenance of Patents. At its own expense, each of the
Assignors shall make timely payment of all post-issuance fees required pursuant
to 35 U.S.C. Section 41 to maintain in force rights under each Patent.
5.5. Prosecution of Patent Application. At its own expense,
each of the Assignors shall diligently prosecute all applications for U.S.
patents listed on Annex E, and shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies, absent written consent
of the Lender.
5.6. Other Patents and Copyrights. Within 30 days of
acquisition of a U.S. Patent or Copyright, or of filing of an application for a
U.S. Patent or Copyright, each of the Assignors shall deliver to the Lender a
copy of such Patent or Copyright, as the case may be, with a grant of security
as to such Patent or Copyright, as the case may be, confirming the grant thereof
hereunder, the form of such confirmatory grant to be substantially the same as
the form hereof.
5.7. Remedies. If an Event of Default shall occur and be
continuing, the Lender may, by written notice to the Assignors, take any or all
of the following actions: (i) declare the entire right, title and interest of
each of the Assignors in each of the Patents and Copyrights vested, in which
event such right, title and interest shall immediately vest in the Lender and
the holders of the Notes, in which case each of the Assignors agrees to execute
an assignment in form and substance satisfactory to the Lender of all its right,
title and interest to such Patents and Copyrights to the Lender and the holders
of the Notes; (ii) take and practice or sell the Patents and Copyrights; (iii)
direct each of the Assignors to refrain, in which event each of the Assignors
shall refrain, from practicing the Patents and Copyrights directly or
indirectly, and each of the Assignors shall execute such other and further
documents as the Lender may request further to confirm this and to transfer
ownership of the Patents and Copyrights to the Lender.
SECTION 6. PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Lender's Security. Each of the Assignors
will do nothing to impair the rights of the Lender in the Collateral. Each of
the Assignors will at all times keep its Inventory and Equipment insured in
favor of the Lender, at its own expense, to the Lender's reasonable satisfaction
against fire, theft and all other risks to which such Collateral may be subject;
all policies or certificates with respect to such insurance shall be endorsed to
the Lender's satisfaction (including, without limitation, by naming the Lender
as loss payee) and deposited with the Lender. If any of the Assignors shall fail
to insure such Inventory and Equipment to the Lender's reasonable satisfaction,
or if any of the Assignors shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Lender shall have the right (but shall be
under no obligation) to procure such insurance and each of the Assignors agrees
to reimburse the Lender for all costs and expenses of procuring such insurance.
The Lender may apply any proceeds of such insurance when received by it toward
the payment of any of the Obligations to the extent the same shall then be due.
Each of the Assignors assumes all liability and responsibility in connection
with the Collateral acquired by it and the liability of such Assignor to pay its
Obligations shall in no way be affected or diminished by reason of the
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fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each of the Assignors
agrees that if any warehouse receipt or receipt in the nature of a warehouse
receipt is issued with respect to any of its Inventory, such warehouse receipt
or receipt in the nature thereof shall not be "negotiable" (as such term is used
in Section 7-104 of the Uniform Commercial Code as in effect in any relevant
jurisdiction or under other relevant law).
6.3. Further Actions. Each of the Assignors will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to the Lender
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Lender deems
reasonably appropriate or advisable to perfect, preserve or protect its security
interest in the Collateral.
6.4. Financing Statements. Each of the Assignors agrees to
assign and deliver to the Lender such financing statements, in form acceptable
to the Lender, as the Lender may from time to time reasonably request or as are
necessary or desirable in the opinion of the Lender to establish and maintain a
valid, enforceable, first priority security interest in the Collateral as
provided herein and the other rights and security contemplated herein, all in
accordance with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions or any other relevant law. Each of the Assignors will pay any
applicable filing fees and related expenses. Each of the Assignors authorizes
the Lender to file any such financing statements without the signature of any of
the Assignors.
SECTION 7. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each of
the Assignors agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect, the Lender, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and
may:
(a) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from any of the
Assignors or any other Person who then has possession of any part
thereof with or without notice or process of law, and for that purpose
may enter upon such Assignor's premises where any of the Collateral is
located and remove the same and use in connection with such removal
any and all services, supplies, aids and other facilities of such
Assignor; and
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(b) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables) constituting the Collateral to make any payment required
by the terms of such instrument or agreement directly to the Lender;
and
(c) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations; and
(d) sell, assign or otherwise liquidate, or direct any of the
Assignors to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of
any such sale or liquidation; and
(e) take possession of the Collateral or any part thereof, by
directing any of the Assignors in writing to deliver the same to the
Lender at any place or places designated by the Lender, in which event
such Assignor shall at its own expense:
(i) forthwith cause the same to be moved to the place or
places so designated by the Lender and there delivered to the
Lender,
(ii) store and keep any Collateral so delivered to the
Lender at such place or places pending further action by the
Lender as provided in Section 7.02, and
(iii) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them
in good condition;
it being understood that the obligations of each of the Assignors so to deliver
the Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Lender shall be
entitled to a decree requiring specific performance by any of the Assignors of
such obligation.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Lender under or pursuant to Section 7.1, and any other
Collateral whether or not so repossessed by the Lender, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Lender may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. Any of
the Collateral may be sold, leased or otherwise disposed of, in the condition in
which the same existed when taken by the Lender or after any overhaul or repair
which the Lender shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceeding permitted
by such requirements shall be made upon not less than 10 days' written notice to
any of the Assignor specifying the time at which such disposition is to be made
and the intended sale price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
Assignors or any nominee of the Assignors to acquire the Collateral involved at
a
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price or for such other consideration at least equal to the intended sale price
or other consideration so specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than 10
days' written notice to any of the Assignors specifying the time and place of
such sale and, in the absence of applicable requirements of law, shall be by
public auction (which may, at the Lender's option, be subject to reserve), after
publication of notice of such auction not less than 10 days prior thereto in two
newspapers in general circulation in Knoxville, Tennessee. To the extent
permitted by any such requirement of law, the Lender and/or the holders of the
Notes may bid for and become the purchaser of the Collateral or any item
thereof, offered for sale in accordance with this Section 7.2 without
accountability to any of the Assignors (except to the extent of surplus money
received as provided in Section 7.4). If, under mandatory requirements of
applicable law, the Lender shall be required to make disposition of the
Collateral within a period of time which does not permit the giving of notice to
any of the Assignors as hereinabove specified, the Lender need give the
Assignors only such notice of disposition as shall be reasonably practicable in
view of such mandatory requirements of applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH OF THE ASSIGNORS HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE LENDER'S
TAKING POSSESSION OR THE LENDER'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH ASSIGNORS WOULD
OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF
ANY STATE, and each of the Assignors hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession
except any damages which are the direct result of the Lender's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of the
Lender's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
of the Assignors, for itself and all who may claim under it, insofar
as it now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of each of the Assignors therein and
thereto, and shall be a perpetual bar both at law and in equity against each of
the Assignors and against any and all Persons claiming or attempting to claim
the Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under any of the Assignors.
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7.4. Application of Proceeds. The proceeds of any Collateral obtained
pursuant to Section 7.1 or disposed of pursuant to Section 7.2 shall be applied
as follows:
(i) to the payment of any and all expenses and fees (including
reasonable attorneys' fees) incurred by the Lender in obtaining, taking
possession of, removing, insuring, repairing, storing and disposing of
Collateral and any and all amounts incurred by the Lender in connection
with the A Note;
(ii) next, any surplus then remaining to the payment of the
Obligations in the following order of priority:
(a) all interest accrued and unpaid with respect to the A Note;
(b) the principal amount owing on the A Note;
(c) any and all expenses and fees incurred by the Lender in
connection with the B Note;
(d) all interest accrued and unpaid with respect to the B Note;
(e) the principal amount owing on the B Note; and
(f) all other Obligations then owing;
(iii) if no other Obligation are outstanding, any surplus then
remaining shall be paid to the Assignors, subject, however, to the rights
of the holder of any then existing Lien of which the Lender has actual
notice (without investigation);
it being understood that each of the Assignors shall remain liable to the extent
of any deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (i) and (ii) of this Section
7.4 with respect to any of the Assignors. All fees and expenses to be paid
pursuant to this section shall be allocated pro rata among the A Note and the B
Note based on the principal amount thereof.
7.5. Remedies Cumulative. No failure or delay on the part of
the Lender or any holder of any Note in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any of the Assignors and the Lender or the holder of any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Lender or the holder of any Note would
otherwise have. No notice to or demand on any of the Assignors in any case shall
entitle any of the Assignors to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Lender or the
holder of any Note to any other or further action in any circumstances without
notice or demand.
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7.6. Discontinuance of Proceedings. In case the Lender shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Lender, then and in every such case each of the Assignors, the
Lender and each holder of any of the Obligations shall be restored to its former
positions and rights hereunder with respect to the Collateral subject to the
security interest created under this Agreement, and all rights, remedies and
powers of the Lender shall continue as if no such proceeding had been
instituted.
SECTION 8. INDEMNITY
8.1. Indemnity. (a) Each of the Assignors agrees to indemnify,
reimburse and hold the Lender, the holder of any Note, and its respective
officers, directors, employees, representatives and agents (hereinafter in this
Section 8.1 referred to individually as "Indemnitee" and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 8.01 the foregoing are collectively called "expenses")
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, any other Credit Document or the documents executed in connection
herewith and therewith or in any other way connected with the administration of
the transactions contemplated hereby and thereby or
the enforcement of any of the terms of or the preservation of
any rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or for property damage) or any contract claim; provided that no
Indemnitee shall be indemnified pursuant to this Section 8.1(a) for expenses to
the extent caused by the gross negligence or willful misconduct of such
Indemnitee. Each of the Assignors agrees that upon written notice by any
Indemnitee of any assertion that could give rise to an expense, such Assignors
shall assume full responsibility for the defense thereof. Each Indemnitee agrees
to use its best efforts to promptly notify such Assignor of any such assertion
of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each
of the Assignors agrees to pay, or reimburse the Lender for (if the Lender shall
have incurred fees, costs or expenses because any of the Assignors shall has
failed to comply with its obligations under this Assignment or any other Credit
Document), any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Lender's Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices,
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payment or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees, costs
and expenses in connection with protecting, maintaining or preserving the
Collateral and the Lender's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b),
each of the Assignors agrees to pay, indemnify and hold each Indemnitee harmless
from and against any expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing out of any misrepresentation by any of the
Assignors in this Agreement or any of the other Credit Documents or in any
statement or writing contemplated by or made or delivered pursuant to or in
connection with this Agreement or any of the other Credit Documents.
(d) If and to the extent that the obligations of any of the
Assignors under this Section 8.1 are unenforceable for any reason, each of the
Assignors hereby agree to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each of the Assignors contained in this Article VIII
shall continue in full force and effect notwithstanding the full payment of all
the Notes issued under the Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
SECTION 9. DEFINITIONS
9.1. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
"Agreement" shall mean this Security Agreement, as modified,
supplemented or amended from time to time.
"Assignors" shall have the meaning provided in the first
paragraph of this Agreement.
"Cash Collateral Account" shall mean a restricted non-interest
bearing cash collateral account maintained with the Lender.
"Chattel Paper" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York.
"Collateral" shall have the meaning provided in Section
1.01(a).
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Page 15
"Contracts" shall mean all contracts between any of the
Assignors and one or more additional parties.
"Contract Rights" shall mean all rights of any of the
Assignors (including, without limitation, all rights to payment) under each
Contract.
"Copyrights" shall mean any U.S. copyright to which each of
the Assignors now or hereafter has title, as well as any application for a U.S.
copyright hereafter made by each of the Assignors.
"Credit Agreement" shall have the meaning provided in the
first paragraph of this Agreement.
"Documents" shall have the meaning assigned that term under
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by Assignors and, in any event, shall
include, but shall not be limited to, all machinery, equipment, furnishings,
fixtures and vehicles now or hereafter owned by the Assignors and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" shall have the meaning assigned that
term under the Uniform Commercial Code as in effect on the date hereof in the
State of New York.
"Goods" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Indemnitee" shall have the meaning specified in Section 8.01.
"Instrument" shall have the meaning assigned that term under
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Inventory" shall mean all raw materials, work-in-process, and
finished inventory of each of the Assignors of every type or description and all
documents of title covering such inventory, and shall specifically include all
"inventory" as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York, now or hereafter owned by each of
the Assignors.
"Marks" shall mean any trademarks and service marks now held
or hereafter acquired by each of the Assignors, which are registered in the
United States Patent and Trademark Office, as well as any unregistered marks
used by any of the Assignors in the United States and trade dress, including
logos and/or designs, in connection with which any of these registered or
unregistered marks are used.
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Page 16
"Obligations" shall mean: (a) all indebtedness, obligations
and liabilities (including, without limitation, guarantees and other contingent
liabilities) of each of the Assignors to the Lender or the holder of any Note
arising under or in connection with any Credit Document; (b) any and all sums
advanced by the Lender in order to preserve the Collateral or preserve its
security interest in the Collateral; and (c) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations or liabilities of
each of the Assignors referred to in clause (a), after an Event of Default shall
have occurred and be continuing, the reasonable expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Lender of its rights hereunder, together
with reasonable attorneys' fees and court costs.
"Patents" shall mean any U.S. patent to which each of the
Assignors now or hereafter have title, as well as any application for a U.S.
patent now or hereafter made by Assignors.
"Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in the State of New York on the date hereof
or under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Lender or any of the Assignors from time to time with respect to
any of the Collateral, (ii) any and all payments (in any form whatsoever) made
or due and payable to any of the Assignors from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any Person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by Assignors and, in any event, shall include,
but shall not be limited to, all of each of the Assignor's rights to payment for
goods sold or leased or services performed by each of the Assignors, whether now
in existence or arising from time to time hereafter, including, without
limitation, rights evidenced by an account, note, contract, security agreement,
chattel paper or other evidence of indebtedness or security, together with (i)
all security pledged, assigned, hypothecated or granted to or held by each of
the Assignors to secure the foregoing, (ii) all of each of the Assignor's
rights, titles and interests in and to any goods, the sale of which gave rise
thereto, (iii) all guarantees, endorsements and indemnifications on, or of, any
of the foregoing, (iv) all powers of attorney for the execution of any evidence
of indebtedness or security or other writing in connection therewith, (v) all
books, records, ledger cards, and invoices relating thereto, (vi) all evidences
of the filing of financing statements and other statements and the registration
of other instruments in connection therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other
registration officers, (vii) all credit information, reports and memoranda
relating thereto and (viii) all other writings related in any way to the
foregoing.
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SECTION 10. MISCELLANEOUS
10.1. Notices. All notices and other communications hereunder
shall be made at the addresses, in the manner and with the effect provided in
Section 9.3 of the Credit Agreement.
10.2. Waiver; Amendment. This Agreement may be charged,
waived, discharged, or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
10.3. Obligations Absolute. The obligations of each of the
Assignors under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of, or addition or supplement to or
deletion from, any of the Credit Documents or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (ii) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such instrument or agreement or this Agreement or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of
this Agreement or any other Credit Document; (iii) any furnishing of any
additional security to the Lender or any acceptance thereof or any sale,
exchange, release, surrender or realization of or upon any security by the
Lender; or (iv) any invalidity, irregularity or unenforceability of all or part
of the Obligations or of any security therefor.
10.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the partners hereto; provided, however, that none of the
Assignors may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Lender. All agreements, statements,
representations and warranties made by each of the Assignors herein or in any
certificate or other instrument delivered by any of the Assignors or on its
behalf under this Agreement shall be considered to have been relied upon by the
Lender and shall survive the execution and delivery of this Agreement and the
other Credit Documents regardless of any investigation made by the Lender or on
its behalf.
10.5. Headings Descriptive, etc. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement. The provisions of Section 1.2(a) of the Credit Agreement shall apply
to this Agreement as if the reference therein to "Agreement" were to this
Agreement.
10.6. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the law of the State of New York, without giving effect to
conflict of laws principles.
10.7. Each of the Assignor's Duties. It is expressly agreed,
anything herein contained to the contrary notwithstanding, that each of the
Assignors shall remain liable to perform all of the obligations, if any, assumed
by them with respect to the Collateral and the Lender shall not have any
obligations or liabilities with respect to any Collateral by reason of or
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Page 18
arising out of or in connection with this Agreement, nor shall the Lender be
required or obligated in any manner to perform or fulfill any of the obligations
of any of the Assignors under or with respect to any Collateral.
10.8. Termination; Release. When all Obligations have been
paid in full, this Agreement shall terminate, and the Lender, at the request and
expense of each of the Assignors, will execute and deliver to the Assignors the
proper instruments (including Uniform Commercial Code termination statements on
form UCC-3) acknowledging the termination of this Agreement, and will duly
assign, transfer and deliver to the Assignors (without recourse and without any
representation or warranty) such of the Collateral as may be in possession of
the Lender and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
10.9. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by its duly authorized officers as of the
date first above written.
Address
1111 Northshore Drive UNITED PETROLEUM CORPORATION,
Suite N425 as assignor
Knoxville, Tennessee
Attention: [ ] By
---------------------------
Name:
Title:
Address
[ ] CALIBUR SYSTEMS, INC.,
[ ] as assignor,
[ ]
Attention: [ ]
By
---------------------------
Name:
Title
Address
0000 Xxxxxxxxxx Xxxxx XXXXXXX-XXXXXX PETROLEUM
Suite N425 CORPORATION,
Knoxville, Tennessee as assignor
Attention: [ ]
By
---------------------------
Name:
Title
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Page 20
Address
Xxxxxxx Waterfront Plaza INFINITY INVESTORS LIMITED,
Main Street as Assignee
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxx, Xxxx Indies
Attention: Xxxxxx X. Xxxxxxxxx
By
---------------------------
Name:
Title
