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EXHIBIT 10.5
SECURITY AGREEMENT-PLEDGE
(STOCK OF DOMESTIC AND FOREIGN SUBSIDIARIES
OF ___________________________)
This Security Agreement-Pledge is entered into as of the 2nd day of
June, 1997, by ___________________________, a _______ corporation (herein
called "Pledgor"), whose address is __________________________________________,
_______________, in favor of XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as
Agent (herein called "Secured Party") for the Banks from time to time a party
to the Loan Agreement (as hereinafter defined), whose address is 0000
Xxxxxxxxx, Xxxxxxx, Xxxxx 00000 (the "Agreement"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Third
Amended and Restated Loan Agreement dated as of June 20, 1997 between Xxxxxx
Petroleum Services Corp., a Delaware corporation ("Borrower"), and Secured
Party and the Banks from time to time a party thereto (the Third Amended and
Restated Loan Agreement as it may be amended, modified or restated from time to
time and at any time being herein referred to as the "Loan Agreement").
SECTION 1. SECURITY INTEREST. For value received, the receipt and
sufficiency of which is hereby acknowledged including, without limitation, the
agreement by Secured Party and the Banks, or any one of them, to extend and
continue to extend certain credit and financial accommodations to Borrower,
Pledgor has granted and does hereby grant to Secured Party on behalf and for
the ratable benefit of the Banks a security interest in and pledge of, and
agrees and acknowledges that Secured Party has and shall continue to have a
security interest in and pledge of, the following described property (herein
called the "Collateral"), to-wit:
All of the stock in all of Pledgor's subsidiaries listed on Exhibit
"A" hereto attached and hereby made a part hereof.
together with all moneys, income, proceeds and benefits attributable or
accruing to such property including, but not limited to, all stock rights,
rights to subscribe, cash dividends, liquidating dividends, stock dividends,
dividends paid in stock, new securities or other properties or benefits to
which Pledgor is or may hereafter become entitled to receive on account of such
property, and in the event that Pledgor shall receive any of such, Pledgor
shall hold the same as Trustee for Secured Party and will immediately deliver
the same to Secured Party to be held hereunder in the same manner as the
property specifically described above is held hereunder. All of the property
in which Secured Party is hereby granted a security interest shall herein
sometimes be called the "Collateral" or the "Pledged Securities". Pledgor
agrees to execute such stock powers, endorse such instruments, execute such
additional pledge agreements or other documents as may be required by Secured
Party in order to effectively grant to Secured Party the security interest in
the Collateral.
As additional security for payment of the Obligations (as hereinafter
defined), Pledgor hereby grants to Secured Party a security interest in and to,
and a contractual pledge and assignment of, any and all moneys, property,
accounts, securities, documents, chattel paper, claims, demands, instruments,
items or deposits of Pledgor, now or hereafter coming within Secured Party's
custody or control, including, by way of example and not of limitation, all
certificates of deposit and other depository accounts, whether such have
matured or the exercise of Secured Party's rights hereunder results in loss of
interest or
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other penalty on such deposits. Without prior notice to or demand upon
Pledgor, Secured Party may exercise its rights hereunder, as well as other
rights and remedies at law and equity (all of which are cumulative), at any
time when an Event of Default (as hereinafter defined) has occurred and is
continuing.
SECTION 2. OBLIGATIONS. The pledge and security interest granted
hereby is to secure the punctual payment and performance of (i) the Revolving
Credit Notes, and any and all extensions, renewals, modifications, increases
and rearrangements thereof, (ii) all reimbursement obligations now existing or
hereafter arising with respect to Letters of Credit issued by the Issuing Bank
for the account of Borrower in accordance with the Loan Agreement, (iii) the
Term Notes, and any and all extensions, renewals, modifications, increases and
rearrangements thereof, (iv) the obligations of Pledgor and/or Borrower to
Secured Party and the Banks, or any one of them (including without limitation
the Issuing Bank), under the Loan Agreement and the other Loan Documents and
any and all amendments, supplements, modifications and restatements thereof and
thereto, and (v) any and all other indebtedness, liabilities and obligations
whatsoever of Pledgor and/or Borrower to Secured Party and the Banks, or any
one of them, whether direct or indirect, absolute or contingent, primary or
secondary, due or to become due and whether now existing or hereafter arising,
whether joint or several, or joint and several as created and evidenced by, and
arising under, the Loan Agreement and the Notes, and the other Loan Documents,
and all renewals, extensions, increases, and rearrangements of such
indebtedness, obligations or liabilities, including any and all amounts owing
or which may hereafter become owing thereon or in connection therewith,
including, without limitation, any and all amounts of principal, interest,
attorneys' fees, costs of collection and other amounts owing thereunder (all of
which are herein separately and collectively referred to as the "Obligations").
Pledgor acknowledges that the security interest hereby granted shall secure all
future advances as well as any and all other indebtedness, liabilities, and
obligations of Pledgor and/or Borrower to Secured Party and the Banks, or any
one of them, whether now in existence or hereafter arising.
SECTION 3. WARRANTIES AND COVENANTS OF PLEDGOR. Pledgor hereby
represents, warrants, covenants and agrees that:
A. Except for the security interest granted hereby,
Pledgor is the legal and beneficial owner of the Collateral free of any adverse
claim, lien, mortgage, pledge, security interest or other encumbrance, or right
or option on the part of any third party to purchase or otherwise acquire the
Collateral or any part thereof; and Pledgor will defend the Collateral against
all claims and demands of all parties at any time claiming the same or an
interest therein;
B. The pledge of the Collateral pursuant to this
Agreement and the performance of the actions required to perfect such security
interests creates a valid and perfected first priority security interest in the
Collateral and the proceeds thereof in favor of Secured Party, securing the
payment of the Obligations;
C. No authorization, approval, or other action by, and
no notice to or filing with, any governmental authority or regulatory body in
regard to the Pledgor is required (i) for the pledge by Pledgor of the
Collateral pursuant to this Agreement or for
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the execution, delivery or performance of this Agreement by Pledgor, or (ii)
for the exercise by Secured Party of the rights provided in this Agreement or
the remedies in respect of the Collateral pursuant to this Agreement, except
the performance of the actions required to perfect such security interests;
D. No part of the proceeds received by Pledgor from the
Loans made under the Loan Agreement will be used, directly or indirectly, for
the purpose of purchasing or carrying, or for payment in full or in part of
indebtedness which was incurred for the purpose of purchasing or carrying, any
"margin stock," as such term is defined in Regulation U of the Federal Reserve
Board. No part of the proceeds received by Pledgor from the loans made under
the Loan Agreement will be used for any purpose which violates Regulation X of
the Federal Reserve Board;
E. The Pledged Securities constituting stock are duly
authorized, validly issued, fully paid and non-assessable, and none of such
shares has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which such issuance or transfer may be subject. There are no options,
warrants, calls or commitments of any character relating to the Pledged
Securities;
F. The Pledged Securities constituting stock constitute
100% of the issued and outstanding shares of common stock of the Subsidiaries
of the Pledgor now owned by the Pledgor. Pledgor agrees that it will (i) to
the best of its ability, cause its Subsidiaries not to issue any stock, other
securities or other ownership interest in addition to or in substitution for
the shares of stock comprising Pledged Securities, except to the Secured Party,
(ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock, other securities
or other ownership interests of each issuer of Pledged Securities, and (iii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all shares of stock, other securities, or other ownership
interests of any entity which, after the date of this Agreement, becomes a
Subsidiary of Pledgor;
G. Except as provided under Section 3.M below, Pledgor
will not sell or offer to sell or otherwise transfer, pledge, mortgage,
hypothecate, dispose of or encumber the Collateral or any interest therein
without the prior written consent of Secured Party;
H. Pledgor will keep the Collateral free from any and
all adverse liens, mortgages, pledges, claims, security interests and other
encumbrances;
I. Pledgor will pay to Secured Party all expenses and
expenditures, including reasonable attorney's fees and legal expenses, incurred
or paid by Secured Party in preparation, negotiation, administration or
enforcement of this Agreement. Pledgor agrees to pay interest on such amounts
at the Default Rate from the date such are incurred by Secured Party until the
date same are paid by Pledgor;
J. The security interest granted hereby shall in no way
be affected by any indulgence or indulgences, extension or extensions, change
or changes in the form, evidence, maturity, rate of interest or otherwise of
any of the Obligations, nor by want of
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presentment, notice, protest, suit or indulgence upon any of the Obligations,
nor shall any release of, or failure to perfect the security interest or lien
in, any security for or, of any of the parties liable for, the payment of the
Obligations in any manner affect or impair this pledge, and the same shall
continue in full force and effect in accordance with the terms hereof until the
Obligations have been fully paid;
K. [Intentionally Omitted]
L. Secured Party shall have the power to endorse and is
hereby appointed Pledgor's agent for the purpose of endorsing in the name of
Pledgor any instrument or document constituting Collateral or which may be
received in payment or as proceeds of the Collateral;
M. In the event Pledgor shall receive any monies,
income, interest, cash dividends, liquidating dividends, stock dividends, new
securities or other benefits or proceeds attributable or accruing to the
Pledgor will hold the same in trust for the benefit of Secured Party and will
not commingle the same with any other property or monies of Pledgor and will
immediately deliver or otherwise transfer the same to Secured Party in the same
form as so received (with any necessary endorsement) to be held as part of the
Collateral provided, however, so long as an Event of Default is then
continuing, Pledgor may, free of any lien or security interest created hereby,
receive, retain and use all moneys and cash dividends as it would any other
cash payment it otherwise receives;
N. Secured Party shall never be liable for its failure
to give notice to Pledgor of default in the payment of or upon the Collateral.
Secured Party shall have no duty to fix or preserve rights against prior
parties to the Collateral, which Pledgor hereby assumes to do, and shall never
be liable for its failure to use diligence to collect any amount payable in
respect to the Collateral, but shall be liable only to account to Pledgor for
what it may actually collect or receive thereon. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Without limiting the foregoing, it is specifically understood and agreed that
Secured Party shall have no responsibility for ascertaining any maturities or
similar matters relating to any of the Collateral or for informing Pledgor with
respect to any of such matters (irrespective of whether Secured Party actually
has, or may be deemed to have, knowledge thereof). Should Secured Party elect
to collect any amounts to which Pledgor is entitled under the Collateral or
take any other action to protect or preserve Pledgor's interest therein,
Pledgor releases Secured Party from any claim or claims for loss or damage
arising from any act or omission in connection therewith;
O. Pledgor agrees to pay prior to delinquency all taxes,
governmental charges, liens and assessments which, if unpaid, would become a
lien against the Collateral, except such as may be contested in good faith and
as to which adequate reserves have been provided for the payment thereof if
required by generally accepted accounting principles, and upon the failure of
the Pledgor to do so Secured Party at its option may pay any of same for the
account of Pledgor; and
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P. The representations, warranties and covenants set
forth in this Section 3 shall survive the execution and delivery of this
Agreement.
SECTION 4. Voting Rights; Dividends, Etc.
A. So long as no Event of Default shall have occurred
and be continuing and Secured Party shall not have given Pledgor the notice
provided for in Section 4.B. hereafter:
(i) the Pledgor shall be entitled to exercise any
and all voting and/or consensual rights and powers relating or
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Loan Agreement;
provided, however, that the Pledgor shall give the Secured Party
contemporaneous written notice of the manner in which it intends to
exercise, or the reasons for refraining from exercising, any such
right or power other than with respect to the election of directors
and voting with respect to matters in the ordinary course of Pledgor's
business; and
(ii) the Pledgor shall be entitled to receive and
retain any and all ordinary cash dividends and distributions payable
on the Collateral, but only as allowed by Section 6.6 of the Loan
Agreement, and with the understanding that any and all stock and/or
liquidating dividends, distributions in property, returns of capital
or other distributions made on or in respect of the Collateral as a
substitute therefor, whether resulting from a subdivision, combination
or reclassification of the outstanding capital stock of any issuer
thereof or received in exchange for other Collateral or any part
thereof or as a result of any merger, consolidation, acquisition or
other exchange of assets to which any such issuer may be a party or
otherwise, and any and all cash and other property received in
redemption of or in exchange for any Collateral (either at maturity,
upon call for redemption or otherwise) shall be and become part of the
Collateral and, if received by the Pledgor, shall be held in trust for
the benefit of the Secured Party and shall forthwith be delivered to
the Secured Party or its designated custodian (accompanied by proper
instruments of assignment and/or stock powers executed by the Pledgor
in accordance with the Secured Party's instructions) to be held as
Collateral subject to the terms of this Agreement.
B. Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledgor to exercise the voting and other
consensual rights and powers which it is entitled to exercise pursuant to
Section 4.A.(i) and to receive the dividends and distributions which it is
authorized to receive and retain pursuant to Section 4.A.(ii) shall cease upon
the giving of notice to such effect by the Secured Party, and all such rights
shall thereupon, after the giving of such notice by Secured Party, become
vested in the Secured Party who shall, during the continuance of any Event of
Default, have the sole and exclusive right and authority to exercise such
voting and other consensual rights and powers and to receive and hold as
Collateral the dividends and distributions which the Pledgor would otherwise be
authorized to retain pursuant to
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Section 4.A.(ii). Secured Party is hereby granted the right, upon the
occurrence and during the continuance of an Event of Default, to transfer the
Pledged Securities, or any part thereof, to itself or its nominee. Any and all
cash and other property paid over to or received by the Secured Party pursuant
to the provisions of this Subsection B. may be held by the Secured Party as
additional security for the Obligations or, at Secured Party's option, be
applied to the Obligations, whether or not then due, in such order as Secured
Party may elect. If for any reason, any dividend or distribution is received
by the Pledgor after the occurrence and during the continuance of an Event of
Default and after the giving of notice as provided in this paragraph, such
dividend or distribution shall be received in trust for the benefit of the
Secured Party, be segregated from the other property or funds of the Pledgor,
and be forthwith delivered or otherwise transferred to the Secured Party as
collateral in the same form as so received (with any necessary endorsement).
SECTION 5. Event of Default. For purposes of this Agreement,
the terms "Default" and "Event of Default" shall mean a "Default" and an "Event
of Default," respectively, as those terms are each defined in the Loan
Agreement.
SECTION 6. REMEDIES OF SECURED PARTY.
A. Upon the happening of any Event of Default specified
herein, and at any time thereafter that such Event of Default shall continue,
at the option of the holder thereof, all or any part of the Obligations shall
become immediately due and payable without presentment, demand, notice of
intention to accelerate, notice of acceleration, notice of non-payment,
protest, notice of dishonor, or any other notice whatsoever to Pledgor or any
person obligated thereon, and, in addition to those rights set forth in Section
4.B. of this Agreement, Secured Party shall have and may exercise with
reference to the Collateral and Obligations any and all of the rights and
remedies of a secured party under the Uniform Commercial Code as then in effect
in the State of Texas, and as otherwise granted herein or under any other
applicable law or under any other agreements executed by Pledgor (all of which
rights and remedies shall be cumulative), including, without limitation, the
right to sell the Collateral, or any part thereof, at public or private sale or
at any broker's board or on any securities exchange, for cash or on credit, or
for future delivery without assumption of any credit risk, and at such price or
prices as Secured Party may deem satisfactory. Any holder of the Obligations
may be the purchaser of all or any part of the Collateral so sold at any public
sale (or if the Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed standard price
quotations, at any private sale) and thereafter hold the same absolutely, free
from any right or claim or right of whatever kind. Secured Party is hereby
authorized at any such sale, if it deems it advisable so to do, to restrict the
prospective bidders or purchasers of any of the Pledged Securities to persons
who will represent and agree that they are purchasing for their own account for
investment, and not with a view to the distribution or sale of any of the
Pledged Securities. Upon any such sale, Secured Party shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold absolutely,
free from any claim or right of whatever kind. Unless the Collateral threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, Secured Party will give Pledgor notice of such sale at least ten (10)
days before the date fixed for such sale (which Pledgor agrees is reasonable
notice within the meaning of
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Section 9.504(c) of the Texas Business and Commerce Code, as in effect on the
date of execution hereof). Such notice, in the case of a public sale, shall
state the time and place fixed for such sale, and, in the case of sale at a
broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or the
portion thereof so being sold, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may fix in
the notice of such sale. At any such sale, the Collateral may be sold in one
lot as an entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any such sale pursuant to any such
notice. Secured Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In case of
any sale of all or any part of the Collateral on credit or for future delivery,
the Collateral so sold may be retained by Secured Party until the purchase
price is paid by the purchaser thereof, but Secured Party shall not incur any
liability due to any failure of such purchaser to take up and pay for the
Collateral so sold and, upon such failure, such Collateral may again be sold
upon like notice. Instead of exercising the power of sale herein conferred
upon it, Secured Party may proceed by a suit or suits at law or in equity to
foreclose the security interests herein granted and sell the Collateral, or any
part thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
B. If Secured Party shall determine to exercise its
right to sell all or any part of the Collateral and if in the opinion of
counsel to Secured Party it is advisable to have the Collateral or the portion
thereof to be sold registered under the provisions of the Securities Act of
1933 (the "Act"), Pledgor hereby agrees, at its own cost and expense (i) to
execute and deliver, and to use its best efforts to cause each corporation
whose securities are to be sold and its directors and officers to execute and
deliver, all such instruments and documents, and to do or cause to be done all
other such acts and things, as may be necessary or, in the opinion of Secured
Party, advisable to register the Collateral, or the portion thereof to be sold,
under the provisions of the Act and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make or cause to be
made all amendments and supplements thereto and to the related prospectus
which, in the opinion of Secured Party, are necessary or advisable, all in
conformity with the requirements of the Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto, (ii) to use its best
efforts to cause the corporation whose securities are to be sold to agree to
make, and to make available to its security holders as soon as practicable, an
earnings statement (which need not be audited) covering a period of at least 12
months, beginning with the first month after the effective date of any such
registration statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Act, (iii) to use its best efforts to qualify the
Collateral under state Blue Sky or securities laws and to obtain the approval
of any governmental authorities for the sale of the Collateral, as requested by
Secured Party and (iv) at the request of Secured Party, to indemnify and hold
harmless Secured Party, the holder or holders of the Obligations and any
underwriters, including any person controlling any of the foregoing, from and
against any loss, liability, claim, damage and expense, including reasonable
attorneys' fees incurred in connection therewith, under the Act or otherwise
insofar as
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such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained
in such registration statement or prospectus or in any preliminary prospectus
or any amendment or supplement thereto, or arises out of or is based upon any
omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading, such
indemnification to remain operative regardless of any investigation made by or
on behalf of Secured Party, the holder or holders of the Obligations or any
underwriters, including any person controlling any of the foregoing; provided,
however, that Pledgor shall not be liable in any case to the extent that any
such loss, liability, claim, damage or expense arises out of or is based on an
untrue statement or alleged untrue statement or an omission or an alleged
omission made in reliance upon and in conformity with written information
furnished to such corporation by Secured Party, any holder or holder of the
Obligations or any underwriter.
C. Pledgor recognizes that Secured Party may be unable
to effect a public sale of the Collateral by reason of certain prohibitions
contained in the Act, but may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers. Pledgor agrees that any
such private sales may be at prices and other terms less favorable to the
seller than if sold at public sales and notwithstanding such circumstances, any
such private sales shall be deemed to have been made in a commercially
reasonable manner. Secured Party shall be under no obligation to order or
permit the Collateral to be sold at a public sale or to delay a sale of any of
the Collateral for the period of time necessary to permit the issuer of such
securities to register such securities under the Act or under applicable state
securities laws for public sale under the Act, as amended, even if the issuer
would agree to do so.
D. Expenses payable by Pledgor in connection with any
disposition under the provisions above shall include, but shall not be limited
to, all costs of a registration under the Act of any Pledged Securities or of
sale of any Pledged Securities pursuant to any applicable regulation under the
Act, brokers' or underwriters' commissions, fees or discounts, accounting and
legal fees, costs of printing and other expenses of transfer and sale. Pledgor
agrees to pay to Secured Party on demand following and during the continuance
of any Event of Default and in advance of any such registration, sale or other
realization on the Pledged Securities, such amount which, in the estimation of
counsel to Secured Party, will cover all of such costs and expenses described
above, and all other costs and expenses of enforcing the Obligations and of
realizing on the Pledged Securities, including reasonable attorneys' fees and
legal expenses.
E. Proceeds received by Secured Party from disposition
of the Collateral, or any portion thereof, shall be applied toward Secured
Party's expenses and other Obligations in such order or manner as Secured Party
may elect. Pledgor shall be entitled to any surplus if one results after
lawful application of the proceeds. Pledgor shall remain liable for any
deficiency.
F. Pledgor hereby appoints, effective upon the
occurrence of any Event of Default and thereafter, so long as such Event of
Default continues, Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Secured Party's discretion to take any
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action and to execute any instrument which Secured Party in its reasonable
determination may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, to receive, endorse and collect
all instruments made payable to Pledgor representing any dividend or other
distribution in respect of the Pledged Collateral, or any part thereof, and to
give full discharge for the same, and to vote any and all Pledged Securities at
any regular or special meeting of shareholders, as Secured Party may elect. It
is hereby recognized that the power of attorney granted herein is coupled with
an interest and shall not be revocable. Except to the extent otherwise
required by applicable law, Secured Party shall not be obligated or be deemed
to assume any duty or responsibility with respect to any or all of the
Collateral of any nature or kind whatsoever, other than the physical custody
thereof.
G. The rights, powers and remedies given to Secured
Party by this Agreement shall be in addition to all rights, powers and remedies
given to Secured Party by virtue of any applicable statute or rule of law.
Secured Party may exercise any banker's lien or right of setoff with respect to
the Obligations of Pledgor in the same manner as if such Obligations were
unsecured. Any forbearance or failure or delay by Secured Party in exercising
any right, power or remedy hereunder shall not be deemed to be a waiver of such
right, power or remedy, and any single or partial exercise of any right, power
or remedy hereunder shall not preclude the further exercise thereof.
SECTION 7. MISCELLANEOUS.
A. No delay or omission on the part of Secured Party in
exercising any rights hereunder shall operate as a waiver of any such right or
any other right. A waiver on any one or more occasions shall not be construed
as a bar to or waiver of any right or remedy on any future occasion.
B. It is the intention of the parties hereto to comply
strictly with applicable usury laws; accordingly, notwithstanding any provision
to the contrary in this Agreement, the Loan Agreement, the Revolving Credit
Notes, the Term Notes, the other Loan Documents or in any of the documents
securing the payment thereof or otherwise relating thereto, in no event shall
this Agreement or such instruments or documents require or permit the payment,
charging, taking, reserving, or receiving of any sums constituting interest
under applicable laws which exceed the maximum amount permitted by such laws.
If any such excess interest is contracted for, charged, taken, reserved, or
received in connection with any loan evidenced by the Loan Agreement, the
Revolving Credit Notes, the Term Notes, the other Loan Documents or in any of
the documents securing the payment thereof or otherwise relating thereto, or in
any communication by the Secured Party or any other Person to the Pledgor or
any other Person, or in the event all or part of the principal or interest
under, the Loan Agreement, the Revolving Credit Notes, the Term Notes, the
other Loan Documents, or in any of the documents securing the payment thereof
or otherwise relating thereto shall be prepaid or accelerated, so that under
any of such circumstances or under any other circumstance whatsoever the amount
of interest contracted for, charged, taken, reserved, or received on the amount
of principal actually outstanding from time to time under the Revolving Credit
Notes or the Term Notes shall exceed the maximum amount of interest permitted
by applicable usury laws, then in any such event it is agreed as follows: (i)
the provisions of this paragraph shall
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govern and control, (ii) any such excess shall be deemed an accidental or bona
fide error and canceled automatically to the extent of such excess, and shall
not be collected or collectible, (iii) any such excess which is or has been
received notwithstanding this paragraph shall be credited against the then
unpaid principal balance under the Revolving Credit Notes or the Term Notes, as
the case may be, and if the balance is paid, refunded to the Pledgor, and (iv)
the effective rate of interest shall be automatically reduced to the maximum
lawful rate allowed under applicable laws as construed by courts having
jurisdiction hereof or thereof. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, reserved,
or received in connection with the Loan Agreement, the Revolving Credit Notes,
the Term Notes, the other Loan Documents, or in any of the documents securing
the payment thereof or otherwise relating thereto which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate shall
be made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of the applicable
Loan, including all prior and subsequent renewals and extensions, all interest
at any time contracted for, charged, taken, reserved, or received.
C. Pledgor agrees to do such further acts and things,
and to execute and deliver such additional conveyances, assignments,
agreements, proxies, powers of attorney, dividend orders, and other
instruments, as Secured Party may at any time reasonably request in connection
with the administration or enforcement of this Agreement or related to the
Collateral, or any part thereof, or in order better to assure and confirm to
Secured Party its rights, powers and remedies hereunder. Pledgor hereby
consents and agrees that the issuers of the Collateral or any registrar or
transfer agent or trustees for any of the Collateral shall be entitled to
accept the provisions hereof as conclusive evidence of the right of Secured
Party to effect any transfer pursuant to this Agreement, notwithstanding any
other notice or direction to the contrary heretofore or hereafter given by
Pledgor or any other person to any of such issuers or to any such registrar or
transfer agent or trustees.
D. All rights of Secured Party hereunder shall inure to
the benefit of its successors and permitted assigns, and all obligations of
Pledgor shall bind its successors or assigns. The rights and remedies of
Secured Party hereunder are cumulative, and the exercise of any one or more of
the remedies provided herein shall not be construed as a waiver of any of the
other remedies of Secured Party.
E. The security interest hereby granted and all the
terms and provisions hereof shall be deemed a continuing security interest and
shall continue in full force and effect, and all the terms and provisions
hereof shall remain effective as between the parties, until the first to occur
of the following: (i) the expiration of four years from the date of payment of
Pledgor's last obligation to Secured Party or (ii) the repayment by Pledgor of
all Obligations and the receipt, acceptance and acknowledgment by Secured Party
of written notice from Pledgor of revocation of the terms and provisions
hereof.
F. This Agreement and the security interest herein
granted are in addition to, and not in substitution, novation or discharge of,
any and all prior or contemporaneous security agreements and security interests
in favor of Secured Party or assigned to Secured Party by Pledgor. All rights,
powers and remedies of Secured Party
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in all such security agreements are cumulative, but in the event of actual
conflict in terms and conditions, the terms and conditions of the latest
security agreement shall govern and control.
G. Any provision of this Agreement found to be invalid
under the laws of the State of Texas, or any other state having jurisdiction or
other applicable law, shall be invalid only with respect to the offending
provision. All words used herein shall be construed of such gender or number
as the circumstances require. The laws of the State of Texas and, as
applicable, the laws of the United States of America, shall govern this
Agreement, its construction, interpretation and enforcement.
H. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same
instrument.
I. Arbitration.
(a) Arbitration. Upon the demand of any party, any
Dispute shall be resolved by binding arbitration (except as set forth in (e)
below) in accordance with the terms of this Agreement. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party
may by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such other
administrator as the parties shall mutually agree upon in accordance with the
AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall
be resolved in accordance with the Federal Arbitration Act (Title 9 of the
United States Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at a location in
Texas selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided however,
that nothing contained herein shall be deemed to be a waiver by any party that
is a bank of the protections afforded to it under 12 U.S.C. Section 91 or any
similar applicable state law.
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(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to
exercise self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation injunctive relief,
sequestration, attachment, garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy shall not
waive the right of any party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the Texas State Bar with expertise in the
substantive laws applicable to the subject matter of the Dispute. Arbitrators
are empowered to resolve Disputes by summary rulings in response to motions
filed prior to the final arbitration hearing. Arbitrators (i) shall resolve
all Disputes in accordance with the substantive law of the state of Texas, (ii)
may grant any remedy or relief that a court of the state of Texas could order
or grant within the scope hereof and such ancillary relief as is necessary to
make effective any award, and (iii) shall have the power to award recovery of
all costs and fees, to impose sanctions and to take such other actions as they
deem necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Texas Rules of Civil Procedure or other applicable law.
Any Dispute in which the amount in controversy is $5,000,000 or less shall be
decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in controversy exceeds
$25,000,000, the arbitrators shall be required to make specific, written
findings of fact and conclusions of law. In such arbitrations (i) the
arbitrators shall not have the power to make any award which is not supported
by substantial evidence or which is based on legal error, (ii) an award shall
not be binding upon the parties unless the findings of fact are supported by
substantial evidence and the conclusions of law are not erroneous under the
substantive law of the state of Texas, and (iii) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for
vacating, modifying or correcting an award the right to judicial review of (A)
whether the findings of fact rendered by the arbitrators are supported by
substantial evidence, and (B) whether the conclusions of law are erroneous
under the substantive law of the state of Texas. Judgment confirming an award
in such a proceeding may be entered only if a court determines the award is
supported by substantial evidence and not based on legal error under the
substantive law of the state of Texas.
(f) Miscellaneous. To the maximum extent practicable,
the AAA, the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing of the
Dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent necessary to
exercise any
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judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties.
J. The Debtor hereby waives all rights to receive from
the Banks a copy of any Financing Statement or Financing Change Statement
filed, or any Verification Statement received, at any time in respect of this
Agreement.
K. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT, AND ALL
OTHER DOCUMENTS EXECUTED BY PLEDGOR IN CONNECTION WITH THE LOAN AGREEMENT
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed as of the date set forth above.
___________________________
By:
-----------------------------------
Name:
Title:
- PLEDGOR -
Exhibit A - Collateral
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