to make any subsequent Advance until all items required by this Article
have been delivered.
ARTICLE VII
7.
COLLATERAL SECURITY
7.1
Grant of Lien.
(A)
AS SECURITY FOR THE PROMPT SATISFACTION OF ALL
OBLIGATIONS, BORROWER HEREBY ASSIGNS, TRANSFERS AND SETS OVER TO BANK ALL OF
BORROWER'S INTEREST IN AND TO, AND GRANTS BANK A LIEN ON, UPON AND IN THE
COLLATERAL.
(B)
NO SUBMISSION BY BORROWER TO BANK OF A
SCHEDULE OR OTHER PARTICULAR IDENTIFICATION OF COLLATERAL SHALL BE NECESSARY TO
VEST IN BANK SECURITY TITLE TO AND A SECURITY INTEREST IN EACH AND EVERY ITEM OF
COLLATERAL NOW EXISTING OR HEREAFTER CREATED AND ACQUIRED, BUT RATHER SUCH TITLE
AND SECURITY INTEREST SHALL VEST IN BANK IMMEDIATELY UPON THE CREATION OR
38
ACQUISITION OR ANY ITEM OF COLLATERAL HEREAFTER CREATED OR ACQUIRED, WITHOUT THE
NECESSITY FOR ANY OTHER OR FURTHER ACTION BY BORROWER OR BY BANK.
7.2
MAINTENANCE OF LIEN.
(A)
BORROWER AUTHORIZES BANK TO FILE ONE OR MORE
FINANCING STATEMENTS (INCLUDING INITIAL FINANCIAL STATEMENTS AND CONTINUATION
AND AMENDMENT STATEMENTS) TO PERFECT BANK'S LIEN IN THE COLLATERAL PURSUANT TO
THE UNIFORM COMMERCIAL CODE, SUCH FINANCING STATEMENTS TO BE IN FORM AND
SUBSTANCE AS REQUIRED BY BANK.
(B)
BORROWER HEREBY APPOINTS BANK AS ITS
ATTORNEY-IN-FACT (WITHOUT REQUIRING BANK TO ACT AS SUCH) TO FILE ANY FINANCING
STATEMENT IN THE NAME OF BORROWER, AND TO PERFORM ALL OTHER ACTS THAT BANK DEEMS
APPROPRIATE TO PERFECT AND CONTINUE BANK'S LIEN AND TO PROTECT AND PRESERVE THE
COLLATERAL.
(C)
IN CONNECTION WITH BANK'S LIEN, BORROWER
WILL:
(1)
EXECUTE AND DELIVER, AND CAUSE TO BE
EXECUTED AND DELIVERED, SUCH DOCUMENTS AND INSTRUMENTS, INCLUDING AMENDMENTS TO
THE SECURITY DOCUMENTS AND FINANCING STATEMENTS (INCLUDING AMENDMENTS THERETO
AND CONTINUATION STATEMENTS THEREOF) IN FORM SATISFACTORY TO BANK AS BANK, FROM
TIME TO TIME, MAY SPECIFY, AND PAY, OR REIMBURSE BANK UPON DEMAND FOR PAYING,
ALL COSTS AND TAXES OF FILING OR RECORDING THE SAME IN SUCH JURISDICTIONS AS
BANK MAY DESIGNATE; AND
(2)
TAKE SUCH OTHER STEPS AS BANK, FROM TIME
TO TIME, MAY DIRECT TO PROTECT, PERFECT, AND MAINTAIN BANK'S LIEN.
ARTICLE VIII
8.
REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants to Bank (provided that it is understood
that each Borrower is making its representations only on its own behalf, and
only to the extent of its knowledge with respect to any other Borrower), knowing
that Bank will rely on such representations and warranties as an inducement to
make the Loans, that:
8.1
Existence.
KMG Chemicals is a duly
organized and existing Texas corporation in good standing, is duly qualified and
in good standing as a foreign corporation in each other Jurisdiction where the
failure to be so qualified might reasonably be expected to have a Material
Adverse Effect, and KMG Chemicals has full power and authority to consummate the
transactions contemplated by this Agreement.
KMG-Bernuth is a duly organized
and existing Delaware corporation in good standing, is duly qualified and in
good standing as a foreign corporation in each other Jurisdiction where the
failure to