Exhibit 10.71
SECURITY AGREEMENT
dated
as of November 19, 2007
of
Rio
Vista Penny LLC, each other Grantor listed on the signature pages
hereof and each other
Grantor that otherwise may become a party hereto
in
favor of
TCW
Asset Management Company, as Administrative Agent
[Security Agreement]
TABLE OF CONTENTS
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ARTICLE I
Definitions and References
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Section 1.1.
Definitions in Note Purchase Agreement
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Section 1.2.
Definitions in the UCC, etc.
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Section 1.3.
Definitions in this Agreement
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Section 1.4.
Rules of Construction; References and Titles
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ARTICLE II
Security Interest
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Section 2.1.
Grant of Security Interest
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Section 2.2.
Secured Obligations Secured
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ARTICLE III
Representations and Warranties
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Section 3.1.
Representations and Warranties
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ARTICLE IV
Covenants
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Section 4.1.
General Covenants Applicable to Collateral
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Section 4.2.
Covenants for Specified Types of Collateral
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ARTICLE V Voting
and Distribution Rights in Respect Of Pledged Equity
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Section 5.1.
Voting Rights
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Section 5.2.
Dividend Rights While No Event of Default Exists
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Section 5.3.
Actions by Secured Party
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Section 5.4.
Rights While an Event of Default Exists
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ARTICLE VI
Remedies, Powers and Authorizations
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Section 6.1.
Normal Provisions Concerning the Collateral
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Section 6.2.
Event of Default Remedies
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Section 6.3.
Application of Proceeds
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Section 6.4.
Deficiency
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Section 6.5.
Private Sales of Investment Property and Other Pledged Equity
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Section 6.6.
Indemnity and Expenses
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Section 6.7.
Non-Judicial Remedies
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Section 6.8.
Limitation on Duty of the Secured Party in Respect of
Collateral
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Section 6.9.
Appointment of Other Agents
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ARTICLE VII
Miscellaneous
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Section 7.1.
Notices
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Section 7.2.
Amendments and Waivers
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Section 7.3.
Additional Grantors
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Section 7.4.
Preservation of Rights
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Section 7.5.
Severability
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Section 7.6.
Survival
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Section 7.7.
Binding Effect and Assignment
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Section 7.8.
Release of Collateral; Termination
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Section 7.9.
Limitation on Interest
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Section 7.10.
Governing Law
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Section 7.11.
Final Agreement
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Section 7.12.
Counterparts; Facsimile
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Section 7.13.
Acceptance by the Secured Party
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Section 7.14. Jurisdiction, Etc.
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Section 7.15.
Restatement
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Schedules
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Schedule 1
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Address for Notices and Jurisdiction
of Organization |
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Schedule 2
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Scheduled Collateral |
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Exhibits
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Exhibit A
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Form of Grantor Accession
Agreement |
ii
SECURITY AGREEMENT
THIS SECURITY
AGREEMENT (this “ Agreement ”) is made as of
November 19, 2007, by Rio Vista Penny LLC and each other
Grantor listed on the signature pages hereof and that may become
parties hereto pursuant to Section 7.3 in favor of TCW Asset
Management Company, as administrative agent under the Note Purchase
Agreement described below (the “ Secured Party
”), for the benefit of the Beneficiaries.
RECITALS
A. Company, the Secured Party, and certain holders
(collectively, the “ Holders ”) are parties to
that certain Note Purchase Agreement dated as of November 19,
2007 (as heretofore or hereafter amended, supplemented or restated
from time to time, the “ Note Purchase Agreement
”).
B. Pursuant to the Note Purchase Agreement, the Holders have
agreed to make senior secured term loans to Company.
C. In
order to induce the Beneficiaries to extend such credit, each
Grantor has agreed to grant to the Secured Party, for the benefit
of the Beneficiaries, a security interest in the Collateral.
NOW,
THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and sufficiency of which the parties
acknowledge, each Grantor agrees as follows:
ARTICLE I
Definitions and References
Section 1.1. Definitions in Note Purchase Agreement.
Capitalized terms used herein and not otherwise defined have the
respective meanings specified in the Note Purchase Agreement.
Section 1.2. Definitions in the UCC, etc. The following
terms have the meanings specified in the UCC:
(a) Account.
(b) Chattel Paper.
(c) Commercial Tort Claim.
(d) Deposit Account.
(e) Document.
(f) Electronic Chattel Paper
[Security Agreement]
1
(g) Equipment.
(h) General Intangible.
(i) Instrument.
(j) Inventory.
(k) Investment Property.
(l) Letter of Credit Right.
(m) Payment Intangible.
(n) Proceeds.
(o) Securities Account.
(p) Security.
(q) Uncertificated Security.
Other terms
used in this Agreement that are defined in the UCC and not
otherwise defined herein or in the Note Purchase Agreement have the
meanings specified in the UCC, unless the context otherwise
requires.
Section 1.3. Definitions in this Agreement . The
following terms have the following meanings:
“Beneficiaries ” means the Secured Party, the
Holders, and any other Person to which any Secured Obligation is
owed.
“
Collateral ” means, with respect to any Grantor, all
property described in Section 2.1 in which such Grantor has
any right, title or interest. References to Collateral herein with
respect to a Grantor are intended to refer to Collateral in which
such Grantor has any right, title or interest and not to Collateral
in which any other Grantor has any right, title or interest.
“
Grantor ” means each Person granting a security
interest in any Collateral pursuant to this Agreement. References
to “Grantor” in this Agreement are intended to refer to
each such Person as if such Person were the only grantor pursuant
to this Agreement, except:
(a) that
references to “any Grantor” are meant to refer to each
Person that is a Grantor,
(b) that
references to “the Grantors” are meant to refer to
collectively to all Persons that are Grantors and
(c) as
otherwise may be specifically set forth herein.
[Security Agreement]
2
“
Holders ” has the meaning specified in Recital
A.
“
Note Purchase Agreement ” has the meaning specified in
Recital A.
“
Pledged Debt ” means all Investment Property and
General Intangibles constituting or pertaining to Indebtedness
owing by any Person to Grantor.
“
Pledged Equity ” means all Investment Property and
General Intangibles constituting or pertaining to Equity in
Persons.
“
Secured Obligations ” means all Obligations of all
Restricted Persons now or hereafter arising under the Note
Documents.
“
Secured Party ” has the meaning specified in the
preamble.
“
Securities Act ” means the Securities Act of
1933.
“
UCC ” means the Uniform Commercial Code in effect in
the State of New York from time to time; provided that, if
perfection or the effect of perfection or non-perfection or the
priority of any security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform
Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or
priority.
Section 1.4. Rules of Construction; References and
Titles . The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words
“include,” “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation.” The word
“will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires
otherwise:
(a) Any
definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein).
(b) Unless otherwise specified, any reference herein to any
Person shall be construed to include such Person’s successors
and assigns.
(c) The
words “herein,” “hereof” and
“hereunder,” and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any
particular provision hereof.
(d) All
references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement.
(e) Any
reference to any Law herein shall, unless otherwise specified,
refer to such law as amended, modified or supplemented from time to
time.
[Security Agreement]
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(f) The
words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any
and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.
(g) Except as specified otherwise, references to any document,
instrument, or agreement shall include:
(i) all exhibits, schedules, and other attachments thereto,
and
(ii) all documents, instruments, or agreements issued or
executed in replacement thereof.
(h) A
title appearing at the beginning of any subdivision is for
convenience only, does not constitute any part of such subdivision
and shall be disregarded in construing the language contained in
such subdivision.
(i) The
phrases “this Section” and “this
subsection” and similar phrases refer only to the section or
subsection hereof in which such phrases occur.
(j) The
word “or” is not exclusive, and the word
“including” (in all of its grammatical variations)
means “including without limitation”.
ARTICLE II
Security Interest
Section 2.1. Grant of Security Interest . As collateral
security for the payment and performance of all Secured
Obligations, Grantor pledges, collaterally assigns and grants to
the Secured Party for the benefit of the Beneficiaries a continuing
security interest in all right, title and interest of Grantor in
and to all of the following property, whether now owned or existing
or hereafter acquired or arising, regardless of where located and
howsoever Grantor’s interests therein arise, whether by
ownership, security interest, claim or otherwise:
(a) Accounts.
(b) All
Equity listed on Schedule 2, whether constituting General
Intangibles or Investment Property.
(c) General Intangibles, including all Payment
Intangibles.
(d) Documents.
(e) Instruments.
(f) Inventory.
(g) Equipment, including, all parts thereof, all accessions
thereto, and all replacements therefor.
[Security Agreement]
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(h) Deposit Accounts, including all Deposit Accounts listed on
Schedule 2.
(i) Investment Property, and all dividends, distributions,
return of capital, interest, distributions, value, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any investment property and all subscription warrants, rights
or options issued thereon or with respect thereto, including
Pledged Debt.
(j) Commercial Tort Claims that are listed opposite
Grantor’s name on Schedule 2, as in effect on the date
hereof or as hereafter modified pursuant to Section 4.2.
(k) Letter of Credit Rights.
(1) Chattel Paper.
(m) Books
and records (including customer lists, marketing information,
credit files, price lists, operating records, vendor and supplier
price lists, land and title records, geological and geophysical
records and data, reserve engineering records and data, computer
software, computer hardware, computer disks and tapes and other
storage media, printouts and other materials and records)
pertaining to any Collateral or to any oil, gas or mineral
properties and interests.
(n) Money
and property of any kind from time to time in the possession or
under the control of any Beneficiary.
(o) Proceeds of the foregoing.
Notwithstanding the foregoing, this Section 2.1 does not grant
a security interest in any property to the extent that such grant
is prohibited under any agreement relating to such property and the
violation of such prohibition would cause Grantor to lose its
interest in or rights with respect to such property, except to the
extent that Part 5 of Article 9 of the UCC would render
such prohibition ineffective.
Section 2.2. Secured Obligations Secured .
(a) The
security interest created hereby in the Collateral secures the
payment and performance of all Secured Obligations.
(b) Without limiting the generality of the foregoing, this
Agreement secures, as to Grantor, the payment of all amounts that
constitute part of the Secured Obligations and would be owed by any
Restricted Person to any Beneficiary under the Note Documents but
for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding
involving a Restricted Person.
(c) Notwithstanding any other provision of this Agreement,
with respect to any Grantor, the liability of such Grantor
hereunder and under each other Note Document to which it is a party
shall be limited to the maximum liability that such Grantor may
incur without rendering this Agreement and such other Note
Documents subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provision of any
applicable state or federal law. This subsection (c) shall not
apply to Company, or Rio Vista ECO LLC.
[Security Agreement]
5
ARTICLE III
Representations and Warranties
Section 3.1. Representations and Warranties . Grantor
represents and warrants to the Beneficiaries as follows:
(a) If
Grantor is not Company, each representation and warranty made by
Company with respect to Grantor in any other Note Document is
correct.
(b) Grantor has and will have at all times the right, power
and authority to grant to the Secured Party as provided herein a
security interest in the Collateral, free and clear of any Lien.
This Agreement creates a valid and binding security interest in
favor of the Secured Party in the Collateral, securing the Secured
Obligations.
(c) None
of the Collateral in which Grantor has granted a security interest
that constitutes goods:
(i) is covered by any Document, except for Documents that are
subject hereto and have been delivered to the Secured Party;
(ii) is subject to any landlord’s lien or similar Lien,
except for Permitted Liens; or
(iii) is in the possession of any Person other than Grantor or
the Secured Party, except for Collateral being transported in the
ordinary course of business and Collateral subject to a joint
operating agreement that is in the possession of the operator under
the agreement.
(d) With
respect to Pledged Equity:
(i) All units and other securities constituting Pledged Equity
have been duly authorized and validly issued, are fully paid and
non-assessable, and were not issued in violation of the preemptive
rights of any Person or of any agreement by which Grantor or any
issuer of Pledged Equity is bound.
(ii) The Pledged Equity listed on Schedule 2 constitutes
all equity interests owned by Grantor in its Subsidiaries. All
endorsements, deliveries, notifications, and other actions required
by Section 4.2(d)(i) and (ii) have been taken with
respect to such Pledged Equity and all other Pledged Equity.
(iii) All documentary, stamp or other taxes or fees owing in
connection with the issuance, transfer or pledge of any Pledged
Equity (or rights in respect thereof) have been paid.
[Security Agreement]
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(iv) No restriction or condition exists with respect to the
transfer, voting or capital of any Pledged Equity.
(v) Except as disclosed on Schedule 2, no Grantor or
issuer of Pledged Equity has any outstanding subscription
agreement, option, warrant or convertible security outstanding or
any other right outstanding pursuant to which any Person would be
entitled to have issued to it units of ownership interest in any
issuer of Pledged Equity.
(vi) Grantor has taken or concurrently herewith is taking all
actions necessary to perfect the Secured Party’s security
interest in Pledged Equity, including any registration, filing or
notice that may be necessary or advisable under Article 8 of
the Uniform Commercial Code as in effect in the jurisdiction in
which any issuer of such Pledged Equity was organized, and no other
Person has any such registration, filing or notice in effect.
(vii) Schedule 2 correctly and completely reflects all
Pledged Equity owned by Grantor as of the date hereof, and
Schedule 2 accurately sets forth the percentage of each class
or series of Equity issued by the issuer of such Pledged Equity
that is held by Grantor.
(viii) Schedule 2 sets forth all agreements, including
all operating, management, voting and shareholder agreements to
which Grantor is a party or by which it is bound and that relate to
Pledged Equity and a correct and complete copy of each such
Agreement has been delivered to counsel for the Secured
Party.
(ix) No issuer of Pledged Equity has made any call for capital
that has not been fully paid by Grantor and each other holder of
Equity of such issuer.
(x) Neither Grantor nor any other holder of equity issued by
any issuer of Pledged Equity is in default under any agreement
relating to Pledged Equity.
(xi) Neither the execution, delivery or performance of this
Agreement nor the exercise of any right or remedy of the Secured
Party hereunder will cause a default under any agreement in respect
of Pledged Equity or otherwise adversely affect or diminish any
Pledged Equity.
(xii) Grantor’s rights under any agreement in respect of
Pledged Equity are enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency
or similar laws of general application relating to the enforcement
of creditors’ rights.
(e) To
the full extent requested by the Secured Party, Grantor has
delivered to the Secured Party all Instruments and other writings
evidencing Pledged Debt in existence on the date hereof, in
suitable form for transfer by delivery with any necessary
endorsement or accompanied by fully executed instruments of
transfer or assignment in blank.
(f) Grantor has no Deposit Account as of the date hereof other
than those listed on Schedule 2.
[Security Agreement]
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(g) Grantor has no Securities Account as of the date
hereof.
(h) Grantor is the beneficiary of no Letter of Credit Right as
of the date hereof other than those listed on
Schedule 2.
(i) Grantor is not aware of any Commercial Tort Claim that it
may have other than those listed on Schedule 2.
(j) Grantor is an entity of the type specified on
Schedule 1 (or Schedule 1 to any security agreement
supplement delivered by it pursuant to Section 7.3) opposite
its name and is organized under the laws of the jurisdiction
specified in such Schedule opposite its name, which is
Grantor’s location pursuant to the UCC. Grantor has not
conducted business under any name except the name in which it has
executed this Agreement, which is the exact name that appears in
Grantor’s Organizational Documents. Grantor’s
organizational identification number, if any, is set forth in
Schedule 1.
(k) Grantor has good and marketable title to the Collateral,
free and clear of all Liens, except for the security interest
created by this Agreement and any Permitted Liens. No effective
financing statement or other registration or instrument similar in
effect covering any Collateral is on file in any recording office
except any that have been filed in favor of the Secured Party
relating to this Agreement.
(1) There
is no condition precedent to the effectiveness of this Agreement
that has not been satisfied or waived.
(m) Grantor, if other than Company, has, independently and
without reliance upon any Beneficiary and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other
Note Document to which it is or is to be a party, and Grantor, if
other than Company, has established adequate means of obtaining
from each other Restricted Person on a continuing basis information
pertaining to, and is now and on a continuing basis will be
completely familiar with, the business, condition (financial or
otherwise), operations, performance, properties and prospects of
each other Restricted Person.
(n) The
direct or indirect value of the consideration received and to be
received by Grantor in connection herewith is reasonably worth at
least as much as the liability of Grantor hereunder and under each
other Note Document to which Grantor is a party, and the incurrence
of such liability in return for such consideration may reasonably
be expected to benefit Grantor, directly or indirectly. Grantor is
not “insolvent” on the date hereof (that is, the sum of
Grantor’s absolute and contingent liabilities, including its
Obligations hereunder and under each other Note Document to which
Grantor is a party, does not exceed the fair market value of
Grantor’s assets). Grantor’s capital is adequate for
the businesses in which Grantor is engaged and intends to be
engaged. Grantor has not incurred (whether hereby or otherwise),
nor does Grantor intend to incur or believe that it will incur,
debts that will be beyond its ability to pay as such debts
mature.
[Security Agreement]
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All
balance sheets, earning statements, financial data and other
information concerning Grantor that have been furnished to Agent
and each Holder to induce it to accept this Agreement (or otherwise
furnished to Agent and each Holder in connection with the
transactions contemplated hereby or associated herewith) fairly
represent the financial condition of Grantor as of the dates and
the results of Grantor’s operations for the periods for which
the same are furnished. None of such balance sheets, earnings and
cash flow statements, financial data and other information contains
any untrue statement of a material fact or omits to state any
material fact that is necessary to make any statements contained
therein not misleading.
ARTICLE IV
Covenants
Section 4.1. General Covenants Applicable to Collateral
. Grantor will at all times perform and observe the covenants
contained in the Note Purchase Agreement that are applicable to
Grantor (whether made by Grantor or made by Company with respect to
Grantor) for so long as any Secured Obligation is outstanding. In
addition, Grantor will, so long as this Agreement shall be in
effect, perform and observe the following:
(a) Without limitation of any other covenant herein, Grantor
shall not cause or permit any change in its name, identity or
organizational structure, or any change to its jurisdiction of
organization, unless Grantor shall have first:
(i) notified the Secured Party of such change at least
30 days prior to the effective date of such change (or such
shorter notice as the Secured Party may approve),
(ii) taken all action requested by the Secured Party (under
the following subsection (b) or otherwise) for the purpose of
further confirming and protecting the Secured Party’s
security interest and rights under this Agreement and the
perfection and priority thereof, and
(iii) if requested by the Secured Party, provided to the
Secured Party a legal opinion to the Secured Party’s
satisfaction confirming that such change shall not adversely affect
the Secured Party’s security interest and rights under this
Agreement or the perfection or priority of such security
interest.
In any
notice delivered pursuant to this subsection, Grantor will
expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing
statements or other notices for the purposes of continuing
perfection of the Secured Party’s security interest in the
Collateral.
(b) Grantor will, at its expense and as from time to time
requested by the Secured Party, promptly execute and deliver all
further instruments, agreements, filings and registrations, and
take all further action, in order:
(i) to confirm and validate this Agreement and the Secured
Party’s rights and remedies hereunder;
(ii) to correct any error or omission in the description
herein of the Secured Obligations or the Collateral or in any other
provision hereof;
[Security Agreement]
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(iii) to perfect, register and protect the security interest
and rights created or purported to be created hereby or to maintain
or upgrade in rank the priority of such security interests and
rights;
(iv) to enable the Secured Party to exercise and enforce its
rights and remedies hereunder; or
(v) otherwise to give the Secured Party the full benefits of
the rights and remedies described in or granted under this
Agreement.
In
connection with the foregoing, Grantor will, whenever requested by
the Secured Party:
(A) execute and file any financing statement, continuation
statement or other filing or registration relating to the Secured
Party’s security interest and rights hereunder, and any
amendment thereto,
(B) mark its books and records relating to any Collateral to
reflect that such Collateral is subject to this Agreement and the
security interests hereunder, and
(C) whenever requested by Secured Party from time to time,
Grantor will obtain from any account debtor or other obligor in
respect of any property included in the Collateral an
acknowledgment by such account debtor or obligor that such property
is subject to this Agreement.
(c) Grantor shall not take any action that would, or fail to
take any action if such failure would, impair the enforceability,
perfection or priority of the Secured Party’s security
interest in any Collateral.
Section 4.2. Covenants for Specified Types of
Collateral . For so long as any Secured Obligation is
outstanding:
(a) Grantor will, promptly upon request by the Secured Party,
deliver to the Secured Party all Documents and Instruments included
in the Collateral. All such Documents and Instruments shall be held
by or on behalf of the Secured Party pursuant hereto and shall be
delivered in suitable form for transfer by delivery with any
necessary endorsement or shall be accompanied by fully executed
instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party.
(b) If at
any time there exists Collateral in which a security interest may
be perfected by a notation on the certificate of title or similar
evidence of ownership of such Collateral, Grantor will, promptly
upon request by the Secured Party, deliver to the Secured Party all
certificates of title and similar evidences of ownership, all
applications therefor, and all other documents that are necessary
or appropriate in order to register the Secured Party’s
security interest in such Collateral on such certificate of title
or other evidence of ownership or in otherwise perfecting the
Secured Party’s security interest in such Collateral.
[Security Agreement]
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(c) For
each Deposit Account that Grantor at any time maintains, Grantor
will, pursuant to an agreement in form and substance satisfactory
to the Secured Party, at the Secured Party’s option, cause
the depository bank that maintains such Deposit Account to agree to
comply at any time with instructions from the Secured Party to such
depository bank directing the disposition of funds from time to
time credited to such Deposit Account, without further consent of
Grantor, or take such other action as the Secured Party may approve
in order to perfect the Secured Party’s security interest in
such Deposit Account. This subsection shall not apply to any
Deposit Account:
(i) for which the Secured Party is the depository bank,
or
(ii) that is specially and exclusively used for payroll,
payroll taxes, and other employee wage and benefit payments to or
for the benefit of Grantor’s salaried employees.
(d) (i) If Grantor shall at any time hold or acquire any
certificated security, Grantor will forthwith endorse, assign, and
deliver the same to the Secured Party, accompanied by such
instruments of transfer or assignment duly executed in
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