EXHIBIT 4.4
SECURITY AGREEMENT
(Equipment)
Between
EDGE JOINT VENTURE II
and
COMPASS BANK-HOUSTON
July ____, 1996
SECURITY AGREEMENT
Equipment
THIS SECURITY AGREEMENT (this "Agreement") is made as of July ____, 1996,
between EDGE JOINT VENTURE II, a joint venture formed under the laws of the
State of Texas with principal offices at 1111 ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Debtor"); and COMPASS BANK-HOUSTON, a Texas State
Chartered Banking Institution with offices at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Secured Party").
RECITALS
A. WHEREAS, Secured Party has made a loan to Debtor in the original
principal amount of THREE HUNDRED THIRTY-SEVEN THOUSAND AND NO/100 DOLLARS
($337,000.00) as evidenced by that certain promissory note of even date herewith
(together with all extensions for any period, renewals, rearrangements and/or
increases thereof, the "Note"), executed by Debtor and payable to the order of
Secured Party with interest as provided therein.
B. Secured Party has agreed to the same upon certain terms and conditions,
one of which is the execution and delivery by Debtor of this Agreement, and
Debtor has agreed to enter into this Agreement.
C. Therefore, in order to secure the Obligations, as hereinafter defined,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Debtor hereby agrees with Secured Party as
follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Grant of Security Interest. Debtor hereby assigns and grants
to Secured Party a security interest in and right of set-off against the assets
referred to in Section 1.02 (the "Collateral") to secure the prompt payment and
performance of the "Obligations" (as defined in Section 2.02) and the
performance by Debtor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the following types
or items of property (including property hereafter acquired by Debtor as well as
property which Debtor now owns or in which Debtor has rights):
(a) The equipment or other goods described or referred to in Exhibit A
attached hereto and made a part hereof.
(b) (i) Any related or additional property from time to time delivered
to or deposited with Secured Party by or for the account of Debtor; (ii)
all certificates of title or other documents evidencing ownership or
possession of or otherwise relating to any property referred to in this
Section 1.02; (iii) all property used or usable in connection with any
property referred to in this Section 1.02; (iv) all policies of insurance
(whether or not required by Secured Party) covering any property referred
to in this Section 1.02; (v) all proceeds, products, replacements,
additions to, substitutions for, accessions of, and property necessary for
the operation of any of the property referred to in this Section 1.02,
including, without limitation, insurance payable as a result of loss or
damage to any of the property referred to in this Section 1.02, refunds of
unearned premiums of any such insurance policy and claims against third
parties; and (vi) all books and records related to any of the property
referred to in this Section 1.02.
(c) All general intangibles related to any property referred to in
this Section 1.02, including, without limitation, all (i) contractual
rights to performance, and claims for damages, refunds (including tax
refunds) or other monies due or to become due; (ii) orders, franchises,
permits, certificates, licenses, consents, exemptions, variances,
authorizations or other approvals by any governmental agency or court;
(iii) consulting, engineering and technological information and
specifications, design data, patent rights, trade secrets, literary rights,
copyrights, trademarks, labels, trade names and other intellectual
property; (iv) business records, computer tapes and computer software; (v)
goodwill; and (vi) other intangible personal property, whether similar or
dissimilar to the property referred to in this Section 1.02.
It is expressly contemplated that additional property may from time to time be
pledged, assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for all
purposes hereof to include all such additional property, together with all other
property of the types described above related thereto.
Section 1.03 Location of Collateral. The Collateral is located or (except
as otherwise permitted by Section 4.01 or Section 4.14) shall be located only in
the following place (provided that the Collateral shall be subject to the
security interest created by this Agreement irrespective of whether or not the
Collateral is located in the following places): 1111 ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above. As used in this Agreement, the terms
defined above shall have the meanings respectively assigned to them.
Section 2.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
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"Agreement" means this Security Agreement, as the same may from time to
time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently in effect in the
State of Texas, Business and Commerce Code, Chapters 1 through 9. Unless
otherwise indicated by the context herein, all uncapitalized terms which are
defined in the Code shall have their respective meanings as used in Chapter 9 of
the Code.
"Event of Default" means any event specified in Section 6.01.
"Highest Lawful Rate" means the maximum rate of nonusurious interest
allowed from time to time by applicable law.
"Obligations" means the promissory note of Debtor dated July ____, 1996
payable to the order of Secured Party in the principal amount of $337,000.00,
and any and all renewals, extensions for any period, rearrangements or
enlargements. The Obligations shall also include all interest, charges,
expenses, attorneys' or other fees and any other sums payable to or incurred by
Secured Party in connection with the execution, administration or enforcement of
Secured Party's rights and remedies hereunder or any other agreement with
Debtor.
"Obligor" means any person or entity, other than Debtor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or performance
of any of the Obligations whether as maker, co-maker, endorser, guarantor,
accommodation party, general partner or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances; Valid and Binding
Agreement. Debtor is the legal and beneficial owner of the Collateral free and
clear of any adverse claim, lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement, and
Debtor has full right, power and authority to assign and grant a security
interest in the Collateral to Secured Party. This Agreement constitutes a
legal, valid and binding obligation of Debtor enforceable against Debtor in
accordance with its terms. The execution, delivery and performance of this
Agreement will not violate the terms of any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which Debtor is
subject and does not require the consent or approval of any other person or
entity.
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Section 3.02 No Required Consent. No authorization, consent, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements) is required for
(i) the due execution, delivery and performance by Debtor of this Agreement,
(ii) the grant by Debtor of the security interest granted by this Agreement,
(iii) the perfection of such security interest or (iv) the exercise by Secured
Party of its rights and remedies under this Agreement.
Section 3.03 First Priority Security Interest. The grant of the security
interest in the Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Collateral, enforceable
against Debtor and all third parties and securing payment of the Obligations.
Section 3.04 No Filings By Third Parties. No financing statement or other
public notice or recording covering the Collateral is on file in any public
office (other than any financing statement or other public notice or recording
naming Secured Party as the secured party therein), and Debtor will not execute
any such financing statement or other public notice or recording so long as any
of the Obligations are outstanding.
Section 3.05 No Name Changes. Debtor has not, during the preceding five
years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by Debtor herein.
Section 3.06 Location of Debtor and Collateral. Debtor's chief executive
office and Debtor's records concerning the Collateral are located at the address
or location set forth in the opening paragraph hereof. The Collateral is
located at Debtor's address set forth in the opening paragraph hereof or at the
location(s), if any, specified in Section 1.02 or 1.03. Any Collateral not at
such location(s) nevertheless remains subject to Secured Party's security
interest.
Section 3.07 Financial Statements; Collateral.
(a) All financial statements of Debtor provided by Debtor to Secured
Party in connection with this Agreement or the Obligations fairly present,
in conformity with generally accepted accounting principles, Debtor's
financial position and results of operations as of the dates and for the
periods stated therein (on a consolidated basis where so indicated). Except
such changes which have been disclosed in writing to Secured Party, there
has been no material adverse change from the financial position or results
of operations reflected by the most recent of such financial statements, or
any action, suit or proceeding pending against Debtor before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could have any such
material adverse effect, or which could draw into question the validity of
this Agreement or the attachment, perfection or priority of the security
interests or liens created hereunder.
(b) All statements or other information provided by Debtor to Secured
Party describing or with respect to the Collateral is or (in the case of
subsequently furnished information) will be when provided correct and
complete in all material respects. The delivery at any time by Debtor
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to Secured Party of additional Collateral or of additional descriptions of
Collateral shall constitute a representation and warranty by Debtor to
Secured Party hereunder that the representations and warranties of this
Article 3 are correct insofar as they would pertain to such Collateral or
the descriptions thereof.
Section 3.08 Delivery of Documents. With respect to any Collateral
covered by one or more certificates of title or other documents evidencing
ownership or possession thereof, each of such certificates or documents has been
delivered to Secured Party (provided that all certificates and documents
referred to in Section 1.02 shall be subject to the security interest created by
this Agreement irrespective of whether or not such delivery shall have been
made).
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and agreements contained
in this Article 4, from the date hereof and for so long as any part of the
Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor. Debtor will
notify Secured Party on or before the date of any change in location of the
Collateral. Debtor will give Secured Party 30 days' prior written notice of (i)
the opening or closing of any place of Debtor's business or (ii) any change in
the location of Debtor's chief executive office or address.
Section 4.02 Change in Debtor's Name or Corporate Structure. Debtor will
not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) without notifying Secured Party of such change in writing at least 30
days prior to the effective date of such change. Without the express written
consent of Secured Party, however, Debtor will not engage in any other business
or transaction under any name other than Debtor's name hereunder.
Section 4.03 Documents; Collateral in Possession of Third Parties. If
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, Debtor will cause the interest of
Secured Party to be properly noted thereon and will, forthwith upon receipt,
deliver same to Secured Party. If any Collateral is at any time in the
possession or control of any warehouseman, bailee, agent or independent
contractor, Debtor shall notify such person or entity of Secured Party's
security interest in such Collateral. Upon Secured Party's request, Debtor
shall instruct any such person or entity to hold all such Collateral for Secured
Party's account subject to Debtor's instructions, or, if an Event of Default
shall have occurred, subject to Secured Party's instructions.
Section 4.04 Maintenance of Existence. Debtor will maintain its existence
as a partnership in its form as of the date hereof.
Section 4.05 Sale, Disposition or Encumbrance of Collateral. Debtor will
not in any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or
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sell, assign, lend, rent, lease or otherwise dispose of or transfer any of the
Collateral to or in favor of any person or entity other than Secured Party.
Section 4.06 Proceeds of Collateral. Debtor will deliver to Secured Party
promptly upon receipt all proceeds delivered to Debtor from the sale or
disposition of any Collateral. If chattel paper, documents or instruments are
received as proceeds, they will be, immediately upon receipt, properly endorsed
or assigned and delivered to Secured Party as Collateral. This Section 4.06
shall not be construed to permit sales or dispositions of Collateral except as
may be elsewhere expressly permitted by this Agreement.
Section 4.07 Additional Collateral. If Secured Party should at any time
be of the opinion that the Collateral is no longer sufficient to collateralize
the Obligations (including, without limitation, a determination based upon such
ratio of the cost or value of Collateral to the amount of Obligations as may be
established by Secured Party), or if Secured Party anticipates such
insufficiency, then Secured Party may request and Debtor agrees to furnish
forthwith such additional security as may be necessary to cure Secured Party's
insecurity regarding the Obligations.
Section 4.08 Payment of Taxes and Liens. Debtor will pay prior to
delinquency all taxes, charges, liens and assessments against the Collateral.
Section 4.09 Records and Information. Debtor shall keep accurate and
complete records of the Collateral (including proceeds). Secured Party may at
any time have access to, examine, audit, make extracts from and inspect without
hindrance or delay Debtor's records, files and the Collateral. Debtor will
promptly provide written notice to Secured Party of all information which in any
way relates to or affects the filing of any financing statement or other public
notices or recordings, or the delivery and possession of items of Collateral for
the purpose of perfecting a security interest in the Collateral. Debtor will
also promptly furnish such information as Secured Party may from time to time
reasonably request regarding (i) the business, affairs or financial condition of
Debtor or (ii) the Collateral or Secured Party's rights or remedies with respect
thereto. Any balance sheets or financial statements requested by Secured Party
pursuant to this Section 4.09 shall conform to generally accepted accounting
principles.
Section 4.10 Performance of Obligations. Debtor will promptly and
properly perform all of its obligations under this Agreement and any other
agreement or contract of any kind now or hereafter existing as security for or
in connection with the payment of the Obligations.
Section 4.11 Reimbursement of Expenses. Debtor will pay to Secured Party
all advances, charges, costs and expenses (including, without limitation, all
costs and expenses of holding, preparing for sale and selling, collecting or
otherwise realizing upon the Collateral if an Event of Default occurs and all
attorneys' fees, legal expenses and court costs) incurred by Secured Party in
connection with the exercise of Secured Party's rights and remedies hereunder.
Debtor hereby assumes all liability for the Collateral, the security interests
created hereunder and any use, possession, maintenance, management, enforcement
or collection of any or all of the Collateral. Debtor agrees to indemnify and
hold Secured Party harmless from and against and
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covenants to defend Secured Party against any and all losses, damages, claims,
costs, penalties, liabilities and expenses, including, without limitation, court
costs and attorneys' fees, incurred because of, incident to, or with respect to
the Collateral (including, without limitation, any use, possession, maintenance
or management thereof, or any injuries to or deaths of persons or damage to
property). All amounts for which Debtor is liable pursuant to this Section 4.11
shall be due and payable by Debtor to Secured Party upon demand. If Debtor
fails to make such payment upon demand (or if demand is not made due to an
injunction or stay arising from bankruptcy or other proceedings) and Secured
Party pays such amount, the same shall be due and payable by Debtor to Secured
Party, plus interest thereon from the date of Secured Party's demand (or from
the date of Secured Party's payment if demand is not made due to such
proceedings) at the Highest Lawful Rate.
Section 4.12 Further Assurances. Upon the request of Secured Party,
Debtor shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.13 Insurance. Debtor shall maintain, with financially sound and
reputable insurers, insurance satisfactory in all respects to Secured Party
covering all insurable risks with respect to the Collateral, including standard
extended coverage, in an amount at least equal to the value of the Collateral.
Policies evidencing any such insurance shall contain a standard mortgagee's
endorsement providing for payment of any loss to Secured Party, and such
policies shall further provide for 30 days' minimum written cancellation notice
to Secured Party. Debtor shall furnish evidence satisfactory to Secured Party
of compliance with these insurance provisions.
Section 4.14 Removal of Collateral. Except for temporary removal in
connection with its ordinary use, Debtor shall not remove the Collateral from
its present address or location without obtaining prior written consent from
Secured Party.
Section 4.15 Condition of Collateral. Debtor will maintain all the
Collateral in good condition, repair and working order, and in accordance with
any manufacturer's manual. Debtor will not misuse, abuse, waste, destroy or
endanger the Collateral or allow it to deteriorate, except for ordinary wear and
tear from its intended use. Debtor will repair, replace or otherwise improve
the Collateral as may be necessary. Debtor will not use any Collateral in
violation of any law, statute, ordinance, regulation or administrative order, or
suffer it to be so used.
Section 4.16 Collateral Attached to Other Property. In the event that the
Collateral is to be attached or affixed to any real property, Debtor hereby
agrees that this Agreement may be filed for record in any appropriate real
estate records as a financing statement which is a fixture filing. In
connection therewith, Debtor will take whatever action is required by Section
4.12. If Debtor is not the record owner of such real property, Debtor will
provide Secured Party with any additional security agreements or financing
statements necessary for the perfection of Secured Party's security interest in
the Collateral. If the Collateral is wholly or partly affixed to real estate or
installed in or affixed to other goods, Debtor will, on demand of Secured Party,
furnish
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Secured Party with a disclaimer (including landlord's or other lien waivers or
releases, if applicable), signed by all persons or entities having an interest
in the real estate or other goods to which the Collateral may have become
affixed, of any prior interest to Secured Party's interest in the Collateral.
Section 4.17 Collateral Separate and Distinct. Debtor shall at all times
keep the Collateral, including proceeds, or cause it to be kept (when in the
possession of warehousemen, bailees, agents, independent contractors or other
third parties), separate and distinct from other property.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
Section 5.02 Discharge Encumbrances. Secured Party may, at its option,
discharge any taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, may pay for insurance on the Collateral and
may pay for the maintenance and preservation of the Collateral. Debtor agrees
to reimburse Secured Party upon demand for any payment so made, plus interest
thereon from the date of Secured Party's demand at the Highest Lawful Rate.
Section 5.03 Attorney-in-Fact. Debtor hereby irrevocably appoints Secured
Party as Debtor's attorney-in-fact, with full authority in the place and stead
of Debtor and in the name of Debtor or otherwise, from time to time in Secured
Party's discretion, but at Debtor's cost and expense and without notice to
Debtor to:
(a) obtain, adjust, sell and cancel any insurance with respect to the
Collateral and endorse any draft drawn by insurers of the Collateral, and
Secured Party may apply any proceeds or unearned premiums of such insurance
to the Obligations (whether or not due);
(b) take any action and to execute any assignment, certificate,
financing statement, notification, document or instrument which Secured
Party 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 Debtor representing any payment or other
distribution in respect of the Collateral or any part thereof and to give
full discharge for the same; and
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(c) receive, change the address for delivery, open and dispose of mail
addressed to Debtor, and to execute, assign and endorse negotiable and
other instruments for the payment of money, documents of title or other
evidences of payment, shipment or storage for any form of Collateral on
behalf of and in the name of Debtor.
Section 5.04 Transfer of Collateral. Secured Party may transfer any or
all of the Obligations, and upon any such transfer Secured Party may transfer
its interest in any or all of the Collateral and shall be fully discharged
thereafter from all liability therefor. Any transferee of the Collateral shall
be vested with all rights, powers and remedies of Secured Party hereunder.
Section 5.05 Licenses and Rights to Use Collateral. In connection with
any transfer or sale (to Secured Party or any other person or entity) of the
Collateral, Secured Party is hereby granted a transferable license or other
right to use, without any charge, any of Debtor's labels, patents, copyrights,
trade names, trade secrets, trademarks or other similar property in completing
production, advertising or selling such Collateral. Debtor's rights under all
licenses and franchise agreements shall inure to the benefit of Secured Party
and any transferee of all or any part of the Collateral.
Section 5.06 Cumulative and Other Rights. The rights, powers and remedies
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off. If any of the Obligations are given in renewal, extension
for any period or rearrangement, or applied toward the payment of debt secured
by any lien, Secured Party shall be, and is hereby, subrogated to all the
rights, titles, interests and liens securing the debt so renewed, extended,
rearranged or paid.
Section 5.07 Purchase Money Financing. To the extent that Secured Party
has advanced or will advance funds to or for the account of Debtor to enable
Debtor to purchase or otherwise acquire specific types or items of Collateral,
Secured Party may at its option pay such funds (i) directly to the person or
entity from whom Debtor will make such purchase or acquire such rights or (ii)
to Debtor, in which case Debtor covenants promptly to pay the same to such
person or entity and forthwith furnish to Secured Party, on request, evidence
satisfactory to Secured Party that such payment has been made from the funds so
provided by Secured Party for such payment.
Section 5.08 Disclaimer of Certain Duties. The powers conferred upon
Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Debtor hereby agrees that Secured Party shall not be liable for, nor shall the
indebtedness evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take possession of or
otherwise obtain value for the Collateral.
Section 5.09 Waiver of Notice; Demand and Presentment. Debtor hereby
waives any demand, notice of default, notice of acceleration of the maturity of
the Obligations, notice of intention to accelerate the maturity of the
Obligations, presentment, protest and notice of dishonor
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as to any action taken by Secured Party in connection with this Agreement, or
any instrument or document.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. Any of the following events shall constitute an
Event of Default under this Agreement:
(a) Payments - Debtor or any Obligor defaults in any payment due and
owing pursuant to the Obligations;
(b) Representations and Warranties - any representation or warranty
made by Debtor or any Obligor to Secured Party proves to have been
incorrect in any material respect as of the date thereof;
(c) Covenants - default is made by Debtor or any Obligor in the
performance of any covenant or agreement contained in this Agreement or in
any other document now or hereafter executed in connection with or as
security for the Obligations;
(d) Legal Compliance - the violation by Debtor or any Obligor of, or
the failure of the Collateral to comply with, any applicable law, statute,
ordinance, regulation or administrative order if, as a result of such
violation or noncompliance, the value of the Collateral or the perfection
or priority of Secured Party's security interests therein may be, in the
sole opinion of Secured Party, materially impaired;
(e) Loss, Damage or Destruction of Collateral - the loss, theft,
substantial damage to or destruction of the Collateral or of any material
portion thereof (whether or not covered by insurance);
(f) Judgments, etc. - the entry of a judgment, issuance of an
injunction, order of attachment, or any other process against Debtor or any
Obligor or the Collateral which in the sole opinion of Secured Party
impairs Debtor's (or any such Obligor's) ability to pay or perform the
Obligations;
(g) Termination, Insolvency, etc. - Debtor or any Obligor shall
respectively: (i) dissolve or otherwise terminate its existence in its form
as of the date hereof, (ii) become insolvent or suffer a business failure,
(iii) have a custodian, receiver or agent appointed or authorized to take
charge of its properties, (iv) make an assignment for the benefit of
creditors or call a meeting of creditors for the composition of debts, or
(v) be subject to the commencement of any proceeding in bankruptcy or under
other insolvency laws;
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(h) Material Adverse Change - in the sole opinion of Secured Party,
there is any deterioration, impairment, decline in character or value, or
material adverse change (whether actual or reasonably anticipated) in (i)
the assets, operations or conditions of, or the ability to pay or perform
the Obligations by, Debtor or any Obligor, or (ii) any part of the
Collateral or any other property subject to a lien in favor of Secured
Party securing the Obligations that causes the Collateral or such other
property to become unsatisfactory as to character or value;
(i) Termination of Guaranties or Letters of Credit - any guaranty or
surety executed in connection with the Obligations shall be terminated or
revoked, or payment shall be refused under any letter of credit securing
any or all of the Obligations, or any such letter of credit shall expire
without the written consent of Secured Party; or
(j) Defaults on Other Obligations - default by Debtor or any Obligor
(i) in any payment of principal of or interest on any other indebtedness,
guaranty or other obligation (whether to Secured Party or others) beyond
any period of grace provided with respect thereto, or (ii) in the
performance of any other agreement, term or condition if the effect of such
default is to cause such obligation to become due on demand or before its
stated maturity or to permit the holder(s) of such obligation or the
trustee(s) under any such agreement or instrument to cause such obligation
to become due on demand or prior to its stated maturity, whether or not
such default or failure to perform should be waived by the holder(s) of
such obligation or such trustee(s).
Section 6.02 Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below) or demand to Debtor:
(a) Declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment of the same by
Debtor or any Obligor.
(b) Take possession of the Collateral, or at Secured Party's request
Debtor shall, at Debtor's cost, assemble the Collateral and make it
available at a location to be specified by Secured Party which is
reasonably convenient to Debtor and Secured Party. Secured Party may, at
its option, render any equipment unusable that may be included in the
Collateral, or, at Secured Party's request, Debtor will render it unusable.
In any event, Debtor shall bear the risk of accidental loss or damage to or
diminution in value of the Collateral, and Secured Party shall have no
liability whatsoever for failure to obtain or maintain insurance, nor to
determine whether any insurance ever in force is adequate as to amount or
as to risk insured.
(c) Sell or lease, in one or more sales or leases and in one or more
parcels, or otherwise dispose of any or all of the Collateral in its then
condition or in any other commercially reasonable manner as Secured Party
may elect, in a public or private transaction, at any location as deemed
reasonable by Secured Party (including, without limitation, Debtor's
premises), either for cash or credit or for future delivery at such price
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as Secured Party may deem fair, and (unless prohibited by the Code, as
adopted in any applicable jurisdiction) Secured Party may be the purchaser
of any or all Collateral so sold and may apply upon the purchase price
therefor any Obligations secured hereby. Any such sale or transfer by
Secured Party either to itself or to any other person or entity shall be
absolutely free from any claim of right by Debtor, including any equity or
right of redemption, stay or appraisal which Debtor has or may have under
any rule of law, regulation or statute now existing or hereafter adopted.
Upon any such sale or transfer, Secured Party shall have the right to
deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. It shall not be necessary that the
Collateral or any part thereof be present at the location of any such sale
or transfer. Secured Party may, at its discretion, provide for a public
sale, and 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. Secured Party shall not be obligated to
make any sale pursuant to any such notice. Secured Party may, without
notice or publication, adjourn any public or private sale by announcement
at any time and place fixed for such sale, and such sale may be made at any
time or place to which the same may be so adjourned. In the event any sale
or transfer hereunder is not completed or is defective in the opinion of
Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to cause
one or more subsequent sales or transfers to be made hereunder. In the
event that any of the Collateral is sold or transferred on credit, or to be
held by Secured Party for future delivery to a purchaser or transferee, the
Collateral so sold or transferred may be retained by Secured Party until
the purchase price or other consideration is paid by the purchaser or
transferee thereof, but in the event that such purchaser or transferee
fails to pay for the Collateral so sold or transferred or to take delivery
thereof, Secured Party shall incur no liability in connection therewith. If
only part of the Collateral is sold or transferred such that the
Obligations remain outstanding (in whole or in part), Secured Party's
rights and remedies hereunder shall not be exhausted, waived or modified,
and Secured Party is specifically empowered to make one or more successive
sales or transfers until all the Collateral shall be sold or transferred
and all the Obligations are paid. In the event that Secured Party elects
not to sell the Collateral, Secured Party retains its rights to lease or
otherwise dispose of or utilize the Collateral or any part or parts thereof
in any manner authorized or permitted by law or in equity, and to apply the
proceeds of the same towards payment of the Obligations. Each and every
method of disposition of the Collateral described in this subsection or in
subsection (f) shall constitute disposition in a commercially reasonable
manner.
(d) Take possession of all books and records of Debtor pertaining to
the Collateral. Secured Party shall have the authority to enter upon any
real property or improvements thereon in order to obtain any such books or
records, or any Collateral located thereon, and remove the same therefrom
without liability.
(e) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the
Code or otherwise permitted by law or in equity. Such application may
include, without limitation, the reasonable expenses
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of retaking, holding, preparing for sale or other disposition, and the
reasonable attorneys' fees and legal expenses incurred by Secured Party.
(f) Appoint any person or entity as agent to perform any act or acts
necessary or incident to any sale or transfer by Secured Party of the
Collateral. Additionally, any sale or transfer hereunder may be conducted
by an auctioneer or any officer or agent of Secured Party.
(g) Apply and set-off (i) any deposits of Debtor now or hereafter held
by Secured Party; (ii) all claims of Debtor against Secured Party, now or
hereafter existing; (iii) any other property, rights or interests of Debtor
which come into the possession or custody or under the control of Secured
Party; and (iv) the proceeds of any of the foregoing as if the same were
included in the Collateral. Secured Party agrees to notify Debtor promptly
after any such set-off or application; provided, however, the failure of
Secured Party to give any notice shall not affect the validity of such set-
off or application.
(h) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Liability for Deficiency. If any sale or other disposition
of Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release Debtor
from its liability to Secured Party for any unpaid Obligations, including costs,
charges and expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable to Secured
Party at Secured Party's address set forth in the opening paragraph hereof.
Section 6.04 Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Debtor hereby agrees that five days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be given under
or in connection with this Agreement shall be in writing and shall be mailed by
first class or express mail, postage prepaid, or sent by telex, telegram,
telecopy or other similar form of rapid written transmission or personally
delivered to the receiving party. All such communications shall be mailed, sent
or delivered at the address respectively indicated in the opening paragraph
hereof or at such other address as either party may have furnished the other
party in writing. Any communication so addressed and mailed shall be deemed to
be given when so mailed, any notice so sent by rapid written transmission shall
be deemed to be given when receipt of such transmission is acknowledged by the
receiving operator or equipment, and any communication so
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delivered in person shall be deemed to be given when receipted for or actually
received by Debtor or Secured Party, as the case may be.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Debtor or any Obligor, or of any right, power or
remedy of Secured Party; and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof. Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Debtor hereby agrees that if Secured
Party agrees to a waiver of any provision hereunder, or an exchange of or
release of the Collateral, or the addition or release of any Obligor or other
person or entity, any such action shall not constitute a waiver of any of
Secured Party's other rights or of Debtor's obligations hereunder. This
Agreement may be amended only by an instrument in writing executed jointly by
Debtor and Secured Party and may be supplemented only by documents delivered or
to be delivered in accordance with the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Debtor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be liable for
any interest, cost or expense in connection with any delay in delivering such
proceeds to Debtor.
Section 7.06 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to Secured Party. Accordingly, if the
transactions contemplated hereby would be usurious under applicable state or
federal law, then, notwithstanding anything to the contrary in this Agreement or
in any other agreement entered into in connection with or as security for the
Obligations, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under law applicable to Secured Party that is
contracted for, taken, reserved, charged or received under the Obligations, this
Agreement or under any of such other agreements or otherwise in connection with
the Obligations shall under no circumstances exceed the maximum amount allowed
by such applicable law, (ii) in the event that the maturity of the Obligations
is accelerated for any reason, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to Secured Party may never include more than such maximum amount, and
(iii) excess interest, if any, provided for in this Agreement or otherwise shall
be cancelled automatically and, if theretofore paid, shall be credited by
Secured
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Party on the principal amount of the Obligations (or, to the extent that the
principal amount of the Obligations shall have been or would thereby be paid in
full, refunded by Secured Party to Debtor). The right to accelerate the
maturity of the Obligations does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
Secured Party does not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Secured Party for the use,
forbearance or detention of sums included in the initial Obligations shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of the Obligations until payment in full so that
the rate or amount of interest on account of the initial Obligations does not
exceed the applicable usury ceiling, if any. To the extent that Article 5069-
1.04 of the Texas Revised Civil Statutes is relevant to Secured Party for the
purpose of determining the Highest Lawful Rate, Secured Party hereby elects to
determine the applicable rate ceiling under such Article by the indicated
(weekly) rate ceiling from time to time in effect, subject to Secured Party's
right subsequently to change such method in accordance with applicable law.
Section 7.07 Governing Law; Jurisdiction. This Agreement and the security
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby). Debtor consents to and submits to in personam jurisdiction and
venue in the state district and county courts of the county wherein Secured
Party's offices are located at the address specified in the opening paragraph
hereof, and in the Federal District Courts of the district wherein such offices
of Secured Party are located. This submission to jurisdiction is nonexclusive
and does not preclude Secured Party from obtaining jurisdiction over Debtor or
the Collateral in any court otherwise having jurisdiction.
Section 7.08 Subrogation. Until all indebtedness in connection with the
Obligations shall have been paid in full, Debtor shall have no right to
subrogation or to enforce any remedy or participate in any Collateral or
security whatsoever now or hereafter held by Secured Party.
Section 7.09 Continuing Security Agreement.
(a) This Agreement shall constitute a continuing security agreement,
and all representations and warranties, covenants and agreements shall, as
applicable, apply to all future as well as existing transactions.
Provisions of this Agreement, unless by their terms exclusive, shall be in
addition to other agreements between the parties.
(b) Except as may be expressly applicable pursuant to Section 9.505 of
the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any action taken or inaction pursuant to
Section 6.02, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction
of the Obligations, and the Obligations shall remain in full force and
effect, until Secured Party shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the
full amount then outstanding or until such subsequent time as is
hereinafter provided in subsection (c) below.
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(c) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other person or entity under any bankruptcy law,
common law or equitable cause, then to such extent the Obligations so
satisfied shall be revived and continue as if such payment or proceeds had
not been received by Secured Party, and Secured Party's security interests,
rights, powers and remedies hereunder shall continue in full force and
effect. In such event, this Agreement shall be automatically reinstated if
it shall theretofore have been terminated pursuant to Section 7.10.
(d) In the event that the Obligations are structured such that there
are times when no Indebtedness is owing thereunder, this Agreement shall
remain valid and in full force and effect as to all subsequent indebtedness
included in the Obligations, provided Secured Party has not in the interim
period executed a written release or termination statement or returned
possession of or reassigned the Collateral to Debtor.
Section 7.10 Termination. The grant of a security interest hereunder and
all of Secured Party's rights, powers and remedies in connection therewith shall
remain in full force and effect until Secured Party has retransferred and
delivered all Collateral in its possession to Debtor, and executed a written
release or termination statement and reassigned to Debtor without recourse or
warranty any remaining Collateral and all rights conveyed hereby. Upon the
complete payment of the Obligations and the compliance by Debtor with all
covenants and agreements hereof, Secured Party, at the written request and
expense of Debtor, will release, reassign and transfer the Collateral to Debtor
and declare this Agreement to be of no further force or effect. Notwithstanding
the foregoing, the reimbursement and indemnification provisions of Section 4.11
and the provisions of subsection 7.09(c) shall survive the termination of this
Agreement.
Section 7.11 Counterparts, Effectiveness. This Agreement may be executed
in two or more counterparts. Each counterpart is deemed an original, but all
such counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Debtor and delivery of
the same to Secured Party, and it is not necessary for Secured Party to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.
DEBTOR: EDGE JOINT VENTURE II
By: Edge Petroleum Corporation,
Managing Venturer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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EXHIBIT A
EQUIPMENT OR OTHER GOODS
See attached.
FINANCING STATEMENT
This Financing Statement is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.
1. The name and address of the Debtor is:
EDGE JOINT VENTURE II
1111 ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. The name and address of the Secured Party is:
COMPASS BANK-HOUSTON
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3. This Financing Statement covers the following Collateral:
(a) The equipment or other goods described or referred to in Exhibit A
attached hereto and made a part hereof.
(b) (i) All documents evidencing ownership or possession of or
otherwise relating to any property referred to in this paragraph 3; (ii)
all property used or usable in connection with any property referred to in
this paragraph 3; (iii) all policies of insurance (whether or not required
by Secured Party) covering any property referred to in this paragraph 3;
all proceeds, products, replacements, additions to, substitutions for,
accessions of, and property necessary for the operation of any of the
property described or referred to in this paragraph 3, including, without
limitation, insurance payable as a result of loss or damage to the property
described or referred to in this paragraph 3 and any proceeds thereunder,
refunds of unearned premiums of any such insurance policy and claims
against third parties; and (iv) all books and records related to any of the
property described or referred to in this paragraph 3.
(c) All general intangibles related to any property referred to in
this paragraph 3, including, without limitation, all (i) contractual rights
to performance, and claims for damages, refunds (including tax refunds) or
other monies due or to become due; (ii) orders, franchises, permits,
certificates, licenses, consents, exemptions, variances, authorizations or
other approvals by any governmental agency or court; (iii) consulting,
engineering and technological information and specifications, design data,
patent rights, trade secrets, literary rights, copyrights, trademarks,
labels, trade names and other intellectual property; (iv) business records,
computer tapes and computer software; (v) goodwill; and (vi) all other
intangible personal property, whether similar or dissimilar to the
foregoing.
DEBTOR: EDGE JOINT VENTURE II
By: Edge Petroleum Corporation,
Managing Venturer
By: ______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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