Security Agreement and Financing Statement - Boots & Coots International Well Control Inc. and Geneva Associates LLC
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS SECURITY AGREEMENT AND FINANCING STATEMENT (this 'Agreement') dated as
of January 2, 1998, is by and between Boots & Coots International Well Control,
Inc., a Delaware corporation (the 'Debtor'), and Geneva Associates, L.L.C.
('Geneva'), as Collateral Agent for the Noteholders (as hereinafter defined)
(the 'Secured Party').
R E C I T A L S:
A. The Debtor and Geneva have entered into that certain Note Purchase
Agreement dated as of January 2, 1998, and the Debtor and Main Street Merchant
Partners ('Main Street') have entered into that certain Note Purchase Agreement
dated as of January 2, 1998 (herein, as the same may be amended, modified,
supplemented, extended, rearranged, and/or restated from time to time,
collectively called the 'Note Purchase Agreements'), pursuant to which, upon the
terms and conditions therein set forth, the Debtor has issued its 10.0% Senior
Secured Notes due May 2, 1998, in the aggregate principal amount of $5,000,000
(herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, together with any notes given by
the Debtor in extension, replacement, rearrangement, modification and/or
substitution thereof or therefor, collectively called the 'Notes' and any
holders of the Notes, collectively called the 'Noteholders').
B. Under the terms of the Note Purchase Agreements, the Debtor is required
by each of Geneva and Main Street to provide certain security in respect of the
liabilities of the Debtor under the Note Purchase Agreements, and each of Geneva
and Main Street requires that this Agreement be entered into by the Debtor as a
condition precedent to the purchase by it of its respective Notes.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, capitalized terms have the same
meaning assigned to such terms in the Note Purchase Agreements.
(b) 'UCC' means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas; provided that if by mandatory provisions of
law the perfection or the effect of perfection or non-perfection of the
security interests granted pursuant to Section 2, as well as all other
security interests created or assigned as additional security for the
Obligations (defined hereinafter) pursuant to the provisions of this
Agreement in any Collateral (defined hereinafter) is governed by the
Uniform
Securities Agreement and Financing Statement
Page 1
Commercial Code as in effect in a jurisdiction other than the State
of Texas, 'UCC' means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
2. Grant of Security Interest. To secure all obligations now or
hereafter owing by the Debtor to the holders of the Notes under the Note
Purchase Agreements, the Notes and the other Documents, together with all
amendments, supplements or restatements of any of the foregoing obligations (all
of the foregoing obligations, collectively, the 'Obligations'), the Debtor
hereby conveys, grants, transfers and assigns to the Secured Party and grants to
the Secured Party a first priority security interest in all of Debtor's right,
title and interest in, to and under, the following (but excluding any Excluded
Items as hereinafter defined):
(a) All equipment, goods and inventory (each term as defined in the
UCC), and (whether or not included in such definitions) all tangible
personal property, now owned or hereafter acquired by the Debtor,
including, without limitation (to the extent now owned or hereafter
acquired by the Debtor), (i) all fire fighting and blowout equipment, (ii)
all research, storage or office equipment, computer hardware and software
machinery, chattels, tools, parts, machine tools, furniture, furnishings,
fixtures and supplies, of every nature, wherever located, and (iii) all
additions, accessories and improvements to any equipment and all
substitutions therefor and all accessories, parts and equipment which may
be attached to or which are necessary for the operation and use of any
equipment, personal property or fixtures, together with all accessions
thereto;
(b) All accounts (as defined in the UCC) and accounts receivable now
owned or hereafter acquired by the Debtor;
(c) All rights of the Debtor under or arising out of present or future
leases or contracts relating to any equipment;
(d) All rights of the Debtor in, to and under all patents, trademarks,
tradenames, copyrights, techniques, processes, formulas, know-how or other
intellectual property, and licenses thereof, including, without limitation,
the trade name 'Boots & Coots';
(e) All rights of the Debtor in, to and under all permits,
authorizations, approvals, registrations, licenses, approvals, certificates
of convenience or necessity franchises, immunities, easements, consents,
grants, ordinances or other rights granted by any governmental authority;
(f) All rights of the Debtor in and to all books, records, writings,
databases (electronic or otherwise), information and other property
relating to, used or useful in connection with, or evidencing, embodying,
incorporating or referring to, any of the
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foregoing;
(g) All rights of the Debtor in, to or under (i) all sales orders,
sales contracts, purchase orders, purchase contracts, operating agreements,
management agreements, service agreements, development agreements,
consulting agreements and leases and (ii) all other contract rights,
general intangibles (as defined in the UCC) and, to the extent they can
lawfully be conveyed or assigned, under express or implied warranties from
providers of goods or services;
(h) All rights of the Debtor in, to and under all products,
accessions, rents, issues, profits, returns, income and proceeds of any and
all Collateral and, to the extent not otherwise included, all rights of the
Debtor in, to and under all payments under insurance or any indemnity,
warranty or guaranty payable by reason of any loss or damage to any
Collateral or otherwise with respect to any of the Collateral; and
(i) All rights of the Debtor in, to and under all moneys and
securities deposited with the Secured Party pursuant to any term of this
Agreement or any other Document to be held by the Secured Party hereunder
or thereunder (collectively 'Cash Collateral').
All of the foregoing property, whether now owned or hereafter acquired, other
than the Excluded Items, is hereinafter collectively referred to as the
'Collateral'; Collateral described in clauses (g) and (h) may be referred to
herein as 'Collateral Proceeds'). To have and to hold all and singular the
Collateral by the Secured Party, its successors and assigns, in trust for the
benefit and security of the Secured Party and for the uses and purposes, and
subject to the terms and provisions, set forth in this Agreement and in the Note
Purchase Agreements. Any term of this Agreement to the contrary
notwithstanding, the Collateral does not include any of the Excluded Items. The
term 'Excluded Items' means and includes all properties or assets described
above, whether now owned or hereafter acquired by the Debtor, which by their
terms or by reason of applicable law would become void or voidable if a security
interest therein were granted hereunder by the Debtor or which cannot be
granted, conveyed, mortgaged, transferred or assigned by this Agreement or in
which a security interest cannot effectively be granted hereunder.
3. Rights of Debtor; Debtor Remains Liable.
(a) Any term of this Agreement to the contrary notwithstanding, until
written notice shall be given to the Debtor in accordance with Section 10
that the Secured Party is exercising its rights under Section 10, the
Debtor shall have the right, subject to the prohibitions contained in the
Note Purchase Agreements to possess, retain, enjoy and use the Collateral,
to give consents, waivers or notifications with respect to the Collateral,
to exercise its rights, powers and privileges under the Collateral, to
agree to any modification of any of the terms of the Collateral, to dispose
of any of the Collateral (it being agreed that the Lien of this Agreement
shall attach to the proceeds thereof), and
Securities Agreement and Financing Statement
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otherwise to act with respect to the Collateral in the ordinary course of
business, in each case other than with respect to any Cash Collateral held
by the Secured Party. The Secured Party shall from time to time execute
such instruments and take such other action, in each instance, at the
Debtor's sole expense, as may reasonably be requested of it to give effect
to, or to confirm any action taken by the Debtor in accordance with this
Section 3(a).
(b) Any term of this Agreement to the contrary notwithstanding, until
written notice shall be given to the Debtor in accordance with Section 10
that the Secured Party is exercising its rights under Section 10, the
Debtor shall be entitled, from time to time, except as may otherwise be
provided in the Note Purchase Agreements, to collect and receive for its
own use all Collateral Proceeds. Any Collateral Proceeds collected or
received by or paid over to the Debtor pursuant to this Section 3(b) may be
used, distributed or otherwise disposed of by the Debtor as it determines
except as may otherwise be provided in the Note Purchase Agreements.
(c) Anything herein to the contrary notwithstanding, (i) the Debtor
shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein (and subject to any defenses
thereto), to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise
by the Secured Party of any of the rights hereunder shall not release any
Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral, and (iii) the Secured Party shall
not have any obligation or liability under the contracts and agreements
included in the Collateral solely by reason of this Agreement, nor shall
the Secured Party be obligated to perform any of the obligations or duties
of the Debtor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder, in each case, solely by reason of
this Agreement.
4. Representations and Warranties. The Debtor represents and warrants as
follows:
(a) The Debtor owns the Collateral presently owned by it free and
clear of any Lien, except for Permitted Liens. No effective financing
statement, mortgage, or other instrument similar in effect covering all or
any part of the Collateral is on file in any recording office, except for
(i) protective filings under true leases, (ii) filings filed in favor of
the Secured Party for the benefit of the Secured Party relating to this
Agreement, and (iii) filings, if any, with respect to Permitted Liens.
(b) This Agreement has been duly executed and delivered by the Debtor.
Upon the filing of financing statements in the locations requested by the
Secured Party, the security interests granted herein shall constitute valid
and perfected security interests in the Collateral, subject only to
Permitted Liens, to the extent such security interests can be perfected by
such filings pursuant to the UCC.
Securities Agreement and Financing Statement
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(c) As of the date hereof, no consent of, or notice to, any other
Person and no authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the grant by the Debtor of the Liens granted hereby or for the
execution, delivery or performance of this Agreement by the Debtor, other
than the filing of financing statements as provided in (b) above and except
for such other consents, notices or filings that have been obtained or made
or that as of the date hereof are not required to have been obtained or
made and may be obtained or made, as the case may be, when necessary.
5. Further Assurances.
(a) The Debtor agrees that from time to time, at the expense of the
Debtor, that it will promptly execute and deliver all further instruments
and documents, and take all further action, that the Secured Party may
reasonably request as being necessary or desirable in order to perfect and
protect any security interest granted or purported to be granted hereby or
to enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality
of the foregoing, the Debtor will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices, as the Secured Party may request as being necessary or
desirable in order to perfect and preserve the security interests granted
or purported to be granted hereby.
(b) The Debtor hereby authorizes the Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of the Debtor, in
each case where permitted by law. A carbon, photographic or other
reproduction of any financing statement executed by the Debtor covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) The Debtor will furnish to the Secured Party from time to time
such statements and schedules further identifying and describing the
Collateral, and such other reports in connection with the Collateral, as
the Secured Party may reasonably request at reasonable intervals, all in
reasonable detail.
(d) The Debtor will promptly notify the Secured Party of any change of
its name, corporate structure, federal employer identification number or
the address of its principal place of business or chief executive office
where its books and records are maintained.
(e) The Debtor shall keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Collateral, at the address beside its signature hereto or, upon thirty (30)
days' prior written notice (or such other notice acceptable to the Secured
Party) to the Secured Party, at such other locations in
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a jurisdiction where all action required by this Section 5 shall have been
taken with respect to the Collateral. The Debtor will hold and preserve
such records and will upon reasonable notice permit representatives of the
Secured Party at any time during normal business hours to inspect and make
abstracts from such records.
6. Insurance. The Debtor shall, at its own expense, maintain insurance
with respect to the Collateral as required by the Note Purchase Agreements.
7. Transfers and Other Liens. The Debtor shall not (i) Transfer any of
the Collateral except as permitted by the Note Purchase Agreements, or (ii)
create or suffer to exist any Lien upon or with respect to any of the
Collateral, except for Permitted Liens.
8. Secured Party's Duties. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for reasonable care
in the custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against other parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Secured Party accords
its own property, it being understood that the Secured Party shall not have any
responsibility for taking any necessary steps to preserve rights against other
parties or any other rights with respect to any Collateral.
9. Events of Default. The Debtor shall be in default under this
Agreement upon the occurrence of and during the continuation of any of the
events or conditions defined as Events of Default in any of the Note Purchase
Agreements (an 'Event of Default').
10. Remedies. If any Event of Default shall have occurred and be
continuing, to the extent not prohibited by applicable law:
(a) The Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or under the Note
Purchase Agreements, the other Documents or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral), and the
Secured Party may also (i) require the Debtor to, and the Debtor hereby
agrees that it will, at its expense and upon request of the Secured Party,
forthwith (but in no event sooner than can be effectuated in compliance
with all applicable laws) assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured Party at
a place to be designated by the Secured Party which is reasonably
convenient to both parties, and (ii) without notice except as specified
below, sell, assign or otherwise convey (as applicable) the Collateral or
any part thereof in one or more parcels at public or private sale, for cash
or on credit, and upon such other terms as may be commercially reasonable.
The Debtor agrees, to the fullest extent that it may
Securities Agreement and Financing Statement
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effectively do so under applicable law, that, to the extent notice of sale
shall be required by law, at least ten (10) days' prior notice to the
Debtor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification thereof
within the meaning of Section 9.504(c) of the UCC. The Secured Party shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any proceeds of the Collateral received by the Secured Party may,
and if direct by the Debtor shall, be applied to the Notes pursuant to the
terms of the Note Purchase Agreements and the Intercreditor Agreement.
(c) All rights of marshalling of assets of the Debtor, including any
such right with respect to the Collateral, are hereby waived by the Debtor,
to the fullest extent that it may effectively do so under applicable law.
11. Attorney-in-Fact. The Debtor further agrees, at its expense, to do,
make, procure, assign, endorse, and deliver all acts, things, writings
(including, without limitation, any check, endorsement, certificate or any other
instrument required by the Secured Party), and assurances as the Secured Party
may at any time reasonably require to protect, assure, or enforce its interest
and remedies created by this Agreement. The Debtor further agrees that while
any Event of Default is continuing, the Secured Party may receive any and all
proceeds or income from the Collateral, and the Secured Party may execute,
assign, and endorse appropriate receipts, releases and satisfaction, or
negotiable or non-negotiable instruments, or any other instruments or documents
in the name of and as agent for the Debtor, or in its own name, which the Debtor
has agreed to execute, sign, or endorse herein or any assigned agreements or
contracts, and the Secured Party is hereby constituted and appointed the agent
and attorney-in-fact of the Debtor to do all acts with respect to any of the
Collateral necessary or desirable to accomplish the purposes of this Agreement,
and to execute and endorse all such instruments, in each case while any Event of
Default shall be continuing. The Debtor agrees that this power of attorney is
coupled with an interest and may not be revoked until this Agreement is no
longer in full force and effect as provided in Section 22. At such time
thereafter or after such Event of Default shall cease to be continuing, any
amounts then held by Secured Party pursuant to this Section 11 shall be paid
over to the Debtor.
12. No Waiver; Cumulative Remedies. No failure on the part of the Secured
Party to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. To the fullest extent
permitted by applicable laws, the rights and remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
Securities Agreement and Financing Statement
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13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Debtor and the Secured Party and their respective
successors and assigns. The Debtor may not assign any of its rights or
obligations under this Agreement.
14. Amendment; Entire Agreement. This Agreement embodies the final,
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof. The provisions of this Agreement may be amended or
waived only by a document in writing signed by the parties hereto.
15. Notices. Any notice, consent, or other communication required or
permitted to be given under this Agreement to the Secured Party or the Debtor
must be in writing and delivered in person or by facsimile or by registered or
certified mail, return receipt requested, postage prepaid, as follows:
To Secured Party: Geneva Associates, L.L.C., as Collateral Agent
Attn: Mr. Tracy Turner
First Union Tower
P.O. Box 21962
Greensboro, North Carolina 27420
Telephone: (910) 275-7002
Facsimile: (910) 274-4984
Copy to: Hutcheson & Grundy, L.L.P.
Attn: Ms. Lisa J. Mellencamp
1200 Smith Street, Suite 3300
Houston, Texas 77002-4579
Telephone: (713) 951-2800
Facsimile: (713) 951-2925
To Debtor: Boots & Coots International Well Control, Inc.
Attn: Mr. Larry Ramming
5151 San Felipe, Suite 450
Houston, Texas 77056
Telephone: (713) 621-7911
Facsimile: (713) 621-7988
Copy to: Brown, Parker & Leahy, L.L.P.
Attn: Mr. William T. Heller
1200 Smith Street, Suite 3600
Houston, Texas 77002
Telephone: (713) 654-8111
Facsimile: (713) 621-7988
Securities Agreement and Financing Statement
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Any such notice, consent, or other communication shall be deemed given when
delivered in person, when received by confirmed facsimile or, if given by U.S.
Mail, five (5) days after such communication is deposited in the mail, certified
or registered with return receipt requested.
16. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This
Agreement, and the rights and duties of the parties hereto, shall be construed
in accordance with and governed by the internal laws of the State of Texas;
provided, however that any enforcement of the Secured Party's rights and
remedies in any other jurisdiction shall, to the extent required by applicable
laws, be governed by the laws of the jurisdiction of enforcement. Each party
hereto hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas and of any Texas State court
sitting in Houston, Texas for purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby. Each
party hereto irrevocably waives, to the fullest extent permitted by law, any
objection it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. EACH PARTY
TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS,
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF TEXAS.
17. Headings. The headings and captions used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.
18. Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by the Secured Party shall affect the representations and
warranties or the rights of the Secured Party to rely upon them.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
21. Construction. The Debtor and the Secured Party acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to
Securities Agreement and Financing Statement
Page 9
review this Agreement with its legal counsel and that this Agreement shall be
construed as if jointly drafted by the Debtor and the Secured Party.
22. Termination; Release. On the Collateral Termination Date, the Liens
created hereby (and all rights of the Secured Party hereunder) shall terminate,
and the Secured Party, at the request and expense of the Debtor, forthwith will
execute and deliver to the Debtor a proper instrument or instruments
acknowledging the satisfaction and termination of the Liens created hereby and
will duly assign, transfer and deliver to the Debtor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Lender and as has not theretofore been sold or otherwise
applied pursuant to this Agreement or the Note Purchase Agreements. Upon such
release and redelivery of all of the Collateral, this Agreement shall terminate.
The term 'Collateral Termination Date' shall mean the first date on which no
Note is outstanding under the Note Purchase Agreements and no other obligation
is due and payable thereunder or under any other Document.
IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
Agreement to be duly executed as of the day and year first above written.
DEBTOR:
BOOTS & COOTS INTERNATIONAL WELL
CONTROL, INC., a Delaware corporation
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
SECURED PARTY:
GENEVA ASSOCIATES, L.L.C., as
Collateral Agent
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Securities Agreement and Financing Statement
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