EXHIBIT 10.4
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GREYSTONE MANUFACTURING, L.L.C.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is entered into effective March 4, 2005,
with
the security interest granted by, between
and among GREYSTONE MANUFACTURING,
L.L.C., an Oklahoma limited liability
company of 1613 East 15th Street, Tulsa,
Oklahoma 74120 ("Borrower" or "Grantor" or
"Greystone"), and THE F&M BANK &
TRUST COMPANY, an Oklahoma banking
corporation ("F&M" or "Bank"), to secure the
certain debts of Grantor to Bank.
R E C I T A L S:
Concurrently herewith, Borrower, GLOG Investment, L.L.C., an
Oklahoma
limited liability company ("GLOG"), and
Bank are entering into a Loan Agreement
of even date ("Loan Agreement") whereby
Bank has lent to or is to lend or make
available for advance to Grantor and GLOG
the aggregate sums of TWELVE MILLION
DOLLARS ($12,000,000.00) on three notes,
including: (i) a $1,500,000.00
revolving loan to Grantor ("Revolving
Note"); (ii) a $5,500,000.00 term loan
issued by Greystone ("Term Note"); and
(iii) a $5,000,000.00 term loan issued by
GLOG which is not secured hereunder ("GLOG
Note") (the Revolving Note and Term
Note shall collectively be referred to
hereafter as the "Notes" and secured
hereunder).
The term "Notes" shall refer to the Revolving Note and Term
Note
executed in connection with, or as defined
in, the Loan Agreement, including,
without limitation, any and all amendments
to or extensions, renewals,
modifications, substitutions and
replacements of the Notes and all other
indebtedness or obligations of the Borrower
to Bank whether listed herein or
under the Loan Agreement or this Agreement,
including, without limitation,
listed in Paragraphs 1.3, 1.4 and/or 1.5,
inclusive. The principal indebtedness
secured hereunder is the face amount of the
Notes pursuant to the terms of the
Loan Documents. The Notes are to be secured
by, among other things, this
Security Agreement and the Loan
Documents.
NOW, THEREFORE, for valuable consideration, Grantor and Bank
hereby
agree:
1.
SECURITY INTEREST.
1.1 SECURITY INTEREST. Grantor hereby sells, assigns, conveys,
pledges,
hypothecates, transfers, and grants to Bank
a security interest in all of its
present and future right, title, and
interest in the Collateral for the purposes
of securing the prompt payment to Bank of
any and all of the Secured
Obligations.
1.2 CERTAIN DEFINITIONS. When used in this Security Agreement,
the
following terms shall have the respective
meanings set forth following such
terms:
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Collateral" shall mean:
(a) All of Grantor's accounts, equipment, inventory, general
intangibles and deposit accounts, whether now owned or existing
or
hereafter acquired or arising, and all proceeds and products
thereof in
any form derived therefrom. By way of illustration and not by way
of
limitation, the terms "accounts," "equipment," and "inventory"
shall be
deemed to include within their meanings the following:
(1) "account(s)" shall include, without limitation,
the complete definition of such term under Article 9 of the
Uniform Commercial Code ("UCC") and any and all rights of
Grantor to payment for goods sold or leased or for services
rendered, which rights are not evidenced by an instrument or
chattel paper, whether due or to become due and whether or not
the rights have been earned by performance, including without
limitation, credit card receivables, health care receivables,
payments evidenced by chattel paper, deposit accounts,
commercial tort claims, letter of credits, letter of credit
rights, commodity
accounts of Grantor, commodity contracts,
sums due for consigned goods and any other sums owed to
Grantor;
(2) "equipment" shall include, without limitation,
the
complete definition of such term under the UCC and any and
all goods, including trade fixtures, of the Grantor, other
than inventory, wherever located and whether now owned or
hereafter acquired, including, but not limited to, machinery,
computers, furniture, furnishings and office machines,
together with all attachments, accessories, replacements,
substitutions, additions and improvements to any of the
foregoing, whether now or hereafter acquired, but excluding
any goods leased by Grantor from others;
(3) "inventory" shall include, without limitation,
the complete definition of such term under the UCC and any and
all of Grantor's materials as well as goods, merchandise and
other personal property of the Grantor held for sale or lease
or to be furnished under contracts of service, wherever
located or in transit, together with all attachments,
accessories, replacements, substitutions, additions and
improvements to any of the foregoing, whether now owned or
hereafter acquired;
(4) "general intangibles" shall include, without
limitation, the complete definition of such term under the UCC
and all trade names of Grantor and general intangibles for
money due or to become due; and
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(5) "deposit accounts" shall include, without
limitation, the definition of such term in the UCC and all
deposit accounts of Grantor wherever located and with any
financial institution or Bank and the proceeds of such deposit
accounts.
(b) All documents and documents of title, receipts and the
like, evidencing title to equipment or inventory;
(c) All rights and claims of Grantor in or under all policies
of insurance covering the Collateral of Grantor described
herein,
including but not limited to insurance for fire, damage, loss
and
casualty, together with the proceeds, or products, renewals and
replacements thereof, including prepaid and unearned premiums;
(d) All books and records, including but not limited to credit
files, computer programs, printouts and other computer materials
and
records pertaining to any of the Collateral of Grantor
described
herein;
(e) Without in any way limiting the foregoing, whether derived
from voluntary or involuntary disposition, all proceeds and
products of
the Collateral of Grantor described herein, and all renewals,
replacements, substitutions, additions, accessions, rents,
issues,
royalties and profits of any of the Grantor's Collateral, whether
now
owned or existing or hereafter acquired or arising; and
(f) All Payment Intangibles, Deposit Accounts, now owned or
hereafter acquired and the Proceeds thereof; and
(g) All Proceeds of the foregoing in any form and including,
without limitation, anything received on sale, exchange,
transfer,
collection or disposition of any Collateral granted herein
("Proceeds").
All of the foregoing is hereinafter collectively called the
"Collateral." Grantor may grant purchase
money security interests in equipment
which shall be Collateral and such purchase
money liens will not constitute an
event of default under the Loan Agreement
to the extent that the debt incurred
and the lien granted are consistent with
the Loan Agreement.
"Account Debtor(s)" shall have the complete definition of such
term
under the Uniform Commercial Code.
"Secured Obligations" shall refer to the Notes or Indebtedness
as
defined in and executed in connection with
the Loan Agreement referenced or
defined as notes in the Loan Agreement or
herein, including, without limitation,
any and all amendments to or extensions,
renewals, modifications, substitutions
and replacements of the Notes, the Notes
executed by Grantor to Bank, and all
other indebtedness or obligations of the
Grantor to Bank whether listed herein
or
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under the Loan Agreement or this Agreement,
including, without limitation,
listed in Paragraphs 1.3, 1.4 and/or 1.5,
inclusive.
All capitalized terms shall have the meanings given such terms in
the
Loan Agreement, unless otherwise defined
herein.
1.3 NATURE OF INTEREST. The assignment of the Collateral herein is
for
the purpose of securing the prompt payment
of the Secured Obligations.
Notwithstanding any other provision hereof,
Grantor shall remain liable to
observe and perform all the conditions and
obligations to be observed and
performed by Grantor in accordance with and
pursuant to the terms and provisions
of each of the Accounts. Bank shall have no
obligation or liability under any of
the Accounts by reason of or arising out of
this Security Agreement, or the
receipt by Bank of any payment relating to
any of the Accounts. Bank shall not
be required or obligated in any manner to
(i) perform any of the conditions and
obligations of Grantor under or pursuant to
any of the Accounts; or (ii) make
any payment or any inquiry as to the nature
or the sufficiency of any payment
received by Bank or the sufficiency of any
performance by any party under any of
the Accounts; or (iii) present or file any
claim or take any action to collect
or enforce any performance or payment of
any amounts under any of the Accounts.
Bank shall use reasonable care in the
custody and preservation of the Collateral
in Bank's possession. Bank shall not be
obligated to preserve or protect any
rights with respect to the Collateral
against prior parties. Bank may at any
time deliver the Collateral, or any part
thereof, to Grantor, and the receipt of
Grantor shall be a complete and full
discharge of Bank for the Collateral so
delivered, and Bank shall thereafter be
discharged from any liability or
responsibility therefor.
1.4 ADDITIONAL AGREEMENTS. This Security Agreement is in addition
to
and without limitation of any right of Bank
under any other Security Agreement
granted by Grantor to Bank.
1.5 OTHER SECURED OBLIGATIONS. Grantor and Bank contemplate
that
Borrower and Bank will, from time to time,
engage in various transactions and
that, from time to time, other
circumstances may arise, in which Borrower
becomes obligated to Bank. Grantor
understands that some of those transactions
and circumstances may be of a type that is
very different from the loan
transaction evidenced in part by the Notes
and the circumstances connected
therewith. Grantor desires and intends that
Bank engage in all such
transactions, and deal generally with
Borrower, with the assurance that any and
all indebtedness and obligations now owed,
and that may hereafter become owing,
to Bank from Borrower will be secured by
the liens arising hereunder. Therefore,
the conveyance made by this Security
Agreement, in addition to being made to
secure payment of the Notes, is also made
to secure and enforce the payment of
all other indebtedness and obligations of
Borrower to Bank, whether presently
existing, or in any manner or means
hereafter incurred by Grantor, and evidenced
in any manner whatsoever, either by notes,
advances, overdrafts, bookkeeping
entries, guaranty agreements, liens or
security instruments, or any other method
or means, including any renewal and
extension of the Notes, or of any part of
any present or future indebtedness, or
other obligations of Borrower and
including any further loans and
advancements made by Bank to Borrower. The fact
of repayment of all Notes, Indebtedness and
Liabilities, and performance of all
other obligations, of Borrower, to Bank,
shall not terminate the lien arising
hereunder unless the same be released by
Bank at the
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request of Borrower; but otherwise it shall
remain in full force and effect to
secure all future advances, indebtedness
and other obligations, regardless of
any additional security that may be taken
as to any past or future indebtedness
or other obligations.
1.6 FINANCING STATEMENTS. Grantor irrevocably appoints Bank as
its
lawful attorney and agent to execute
financing statements on Grantor's behalf,
and on its behalf to file Financing
Statements signed by Bank and Grantor, if
necessary, in any appropriate public
office.
1.7 DEPOSIT ACCOUNTS. Grantor irrevocably appoints Bank as its
lawful
attorney and agent to advise any bank or
financial institution with which a
Deposit Account of Grantor is maintained of
the assignment and pledge of the
Deposit Accounts, cause such bank to
execute an authenticated record or similar
agreement acknowledging the assignment and
pledge to Bank of the Deposit
Accounts with that bank or financial
institution and that such bank or financial
institution will comply with any
instructions from Bank as a secured party
directing the disposition of the funds in
the Deposit Accounts without further
inquiry to or the further consent of
Grantor. Until Bank notifies the bank or
financial institution to the contrary,
Grantor may have the limited right to
direct the disposition of funds from the
Deposit Accounts until Bank exercises
its right to restrict Grantor's access to
the funds in the Deposit Accounts
pursuant to the assignment and pledge and
directs the disposition of the
proceeds from those Deposit Accounts. Bank
shall also have a lien on and
security interest in all Deposit Accounts
of Grantor with Bank.
2. REPRESENTATIONS AND WARRANTIES. In order
to induce Bank to enter into the
Loan Agreement, Grantor represents and
warrants to Bank that:
2.1 Except for Permitted Encumbrances and Permitted Liens, Grantor
has
good and marketable title to its Collateral
free and clear of any mortgages,
liens, security interests, claims, or other
encumbrances, except for the
security interest created by this Security
Agreement, purchase money security
interests and/or financing leases of
certain equipment, liens disclosed to Bank
in writing and liens which are expressly
subordinated to the Bank's security
interest. The execution, delivery, and
performance of this Security Agreement
will not result in the creation or
imposition of any other mortgage, lien,
security interest, claim, or other
encumbrance in all or any part of the
Collateral. No lien, claim, financing
statement, security agreement, mortgage,
or other writing is on file in any public
filing or recording office or title
registration office giving notice of or
creating (or purporting to give notice
of or create) any mortgage, lien, security
interest, claim, or other encumbrance
on all or any part of the Collateral,
except financing statements and security
interests in favor of Bank and equipment
lenders and lessors. Bank has a valid
and continuing first lien on, and first
perfected security interest in, the
Collateral, prior to all other mortgages,
liens, security interests, claims or
other encumbrances, except for existing
liens and leases covering equipment and
purchase money security interests in future
equipment, and such security
interest will be enforceable as such
against all other persons.
2.2 The amount and aging of each scheduled account in any
financial
statement, accounts aging, or other
material supplied by Grantor to Bank are
correctly stated. Each of the accounts
arose from the performance of services or
from an outright and lawful sale or lease
of goods by Grantor, and all such
goods have or will be shipped or delivered
to the account debtor,
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and Grantor has possession of, or has
delivered to Bank, all available shipping
and/or delivery receipts evidencing such
shipments or delivery. Each of the
accounts is assignable. Unless otherwise
disclosed to Bank in writing, no
account is subject to setoff, credit,
allowance or adjustment by the account
debtor or by any other party to any
agreement evidencing the account, except
such discount as may be allowed for prompt
payment. No account debtor has
complained as to its liability on any
account and has not returned any of the
goods from the sale or lease from which
such accounts arose. Each of the
accounts arose in the ordinary course of
Grantor's business, unless otherwise
disclosed to Bank in writing, No notice of
the bankruptcy, insolvency, or
failure of any account debtor to pay debts
as they become due has been received
by Grantor.
2.3 All tangible Collateral is in good repair and condition in
all
material respects ordinary wear and tear
excepted. Any and all tangible
Collateral, which is in the possession of
any third parties, is held pursuant to
a contract and is clearly identified as the
property of the Grantor.
3. COVENANTS. Grantor covenants and agrees
to and with Bank at all times
throughout the term of this Agreement, such
covenants and agreements in this
Agreement to be in addition to the
covenants, duties, and obligations of Grantor
set forth in the Loan Agreement and other
Loan Documents, that:
3.1 COLLECTION OF ACCOUNTS. Following the occurrence of an Event
of
Default (as hereinafter defined), Bank is
authorized at any time and from time
to time to take all actions necessary to
collect all or any part of the Accounts
in its own name or in the name of Grantor.
Upon request of Bank, Grantor shall
execute and deliver to Bank (in addition to
documents previously delivered to
Bank) an assignment, in a form satisfactory
to Bank, of all Grantor's right,
title, and interest in and to each of the
Accounts, and shall obtain an
acknowledgment of assignment from any and
all account debtors in a form
satisfactory to Bank. Following the
occurrence of an Event of Default, if the
Accounts at any time include more than one
Account of the same account debtor,
Bank may apply the proceeds of any
collection received from such account debtor
toward the liquidation of any such Account
as Bank may determine. Following the
occurrence of an Event of Default, Bank may
settle or adjust all disputes or
claims directly with the account debtors
with respect to any of the Accounts,
and may compromise or extend the time of
payment for any of the Accounts on such
terms and conditions as Bank may determine
without affecting the liability of
Grantor under this Security Agreement or
any other document evidencing or
relating to the obligations. The costs of
such collection and enforcement,
including attorneys' fees and out-of-pocket
expenses and all other expenses and
liabilities resulting therefrom, shall be
borne solely by Grantor and shall be
immediately due and payable to Bank by
Grantor. Bank shall not be liable for
failure to collect or enforce any of the
Accounts or for any act or omission on
the part of Bank or its officers, agents,
and employees, except willful
misconduct. Until Bank exercises its right,
Grantor is authorized to, and shall
use, its best efforts to effect the prompt
collection of the Accounts. This
authorization may be terminated at any time
following the occurrence of an Event
of Default, and Bank may, at its election,
notify any account debtor on any of
the Accounts of the assignment thereof and
effect collection of any of the
Accounts directly from the account debtor
obligated thereon.
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3.2
DISPOSITION OF ACCOUNT COLLECTIONS. Grantor shall deposit all
Proceeds (with all appropriate
endorsements) received by Grantor into its
accounts at Bank promptly after receipt by
Grantor. After the occurrence of an
Event of Default, Bank may in its sole
discretion apply the Proceeds to the
payment of any of the obligations or
release such money to Grantor without
waiving the right of B
