EXHIBIT 10.27
First National Bank
COMMERCIAL SECURITY AGREEMENT
Borrower: BOATRACS, INC.; ET. AL.
00000 XXXXXXXX XXXXXX XXXX, #000
XXX XXXXX, XX 00000
Grantor: BOATRACS, INC.
Lender: FIRST NATIONAL BANK
Corporate Banking
X.X. Xxx 00000 (XX#00)
San Diego, CA 9218"625
THIS COMMERCIAL SECURITY AGREEMENT Is entered Into among BOATRACS, INC. and
ENERDYNE TECHNOLOGIES, INC. (referred to below Individually and collectively as
"Borrower"); BOATRACS, INC. (referred to below as "Grantor"); and FIRST NATIONAL
BANK (referred to below as "Lender"). For valuable consideration, Grantor,
grants to Lender a security Interest In the Collateral to secure the
Indebtedness and agrees that Lender shall have the rights stated In this
Agreement with respect to the Collateral, In addition to all other rights which
Lender may have by low.
DEFINITIONS. The following words shall have the following meanings when used In
this Agreement. Terms not otherwise defined In this Agreement shall have the
meanings attributed to such terms In the Uniform Commercial Code. All references
to dollar amounts shall mean amounts In lawful money of the United States of
America.
Agreement. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.
Borrower. The word 'Borrower" means each and every person or entity signing the
Note, Including without limitation
BOATRACS, INC. and ENERDYNE TECHNOLOGIES, INC.
Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located: All Inventory, chattel paper, accounts,
equipment, general Intangibles and fixtures more specifically described In the
"Business Assets Collateral Description" attached hereto and Incorporated herein
by reference In addition, the word "Collateral" Includes all the following,
whether now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located: (a) All attachments, accessions, accessories,
tools, parts, supplies, Increases, and additions to and all replacements of and
substitutions for any property described above. (b) All products and produce of
any of the property ,described in this Collateral section. (c) All accounts,
general Intangibles, Instruments, rents, monies, payments, and all other rights,
arising out of a sale, lease, or other disposition of any of the property
described In this Collateral section. (d) All proceeds (Including Insurance
proceeds) from the sale, destruction, loss, or other disposition of any of the
property described In this Collateral section. (e) All records and data relating
to any of the property described In this Collateral section, whether In the form
of a writing, photograph, microfilm, microfiche, or electronic media, together
with all of Grantor's right, title, and Interest In and to all computer software
required to utilize, create, maintain, and process any such records or data on
electronic media.
Event of Default. The words "Event of Default" mean and Include without
limitation any of the Events of Default set
forth below in the section titled "Events of Default."
Grantor. The word "Grantor" means BOATRACS, INC.. Any Grantor who signs this
Agreement, but does not sign the Note, Is signing this Agreement only to grant a
security Interest In Grantor's Interest In the Collateral to Lender and Is not
personally liable under the Note except as other wise provided by contract or
law (e.g., personal liability under a guaranty or as a surety).
Guarantor. The word "Guarantor" means and Includes without limitation each and
all of the guarantors, sureties, and
accommodation parties in connection with the Indebtedness.
Indebtedness. The word "Indebtedness" means the Indebtedness evidenced by the
Note, including all principal and Interest, together with all other Indebtedness
and costs and expenses for which Grantor or Borrower Is responsible under this
Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" Includes all other obligations, debts and liabilities, plus
Interest thereon, of Borrower, or any one
or more of them, to Lender, as well as all claims by Lender against Borrower,
or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
Individually or jointly with others; whether
Borrower may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such Indebtedness may be or hereafter ma
become barred by any statute of
limitations; and whether such Indebtedness
may be or hereafter may become otherwise unenforceable. (Initial Here)
Lender. The word "Lender" means FIRST NATIONAL BANK, its successors assigns.
Note. The word "Note" means the notes dated December 29, 1998, In the
principal
amounts of $750,000.00 and $4,250,000.00 from BOATRACS, INC. to Lender, together
with all renewals of, extensions of, modifications of, refinancings of,
consolidations of and substitutions for the note.
Related Documents. The words "Related Documents" mean and Include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other Instruments, agreements and documents, whether now or
hereafter existing, executed In connection with the Indebtedness.
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (a) Borrower agrees that Lender need not tell
Borrower about any action or Inaction Lender takes In connection with this
Agreement; (b) Borrower assumes the responsibility for being and keeping
Informed about the Collateral; and (c) Borrower waives any defenses that may
arise because of any action or Inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender In
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or falls to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
Agreement Is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (c) Grantor ahs established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (d) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Except as prohibited by applicable law, Grantor waives any
right to require Lender to (a) make any presentment, protest, demand, or notice
of any kind, including notice of change of any terms of repayment of the
Indebtedness default by Borrower or any other guarantor or surety, any action or
nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, on the creation of new or additional Indebtedness (b) proceed against
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (d) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Except as prohibited by applicable law, Grantor waives any
right to require Lender to (a) make any presentment, protest, demand, or notice
of any kind, including notice of change of any terms of repayment of the
Indebtedness default by Borrower or any other guarantor or surety, any action or
nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, on the creation of new or additional Indebtedness (b) proceed against
Borrower, on the creation of new or additional Indebtedness (b) proceed against
any person, including Borrower, before proceeding against Grantor; (c) proceed
against any collateral for the Indebtedness including Borrower's collateral,
before proceeding against Grantor; (d) apply any payments or proceeds received
against the Indebtedness in any order (e) give notice of the terms, time, and
place of any sale of any collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, any collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (g) pursue any remedy or course of
action in Lender's power whatsoever. Grantor also waives any and all rights or
defenses arising by reason of (h) any disability or other defense of Borrower,
any other guarantor or surety or any other person; (i) the cessation from any
cause whatsoever, other than payment in full, of the Indebtedness; (j) the
application of proceeds of the Indebtedness by Borrower for purposes other than
the purposes understood and intended by place of any sale of any collateral
pursuant to the Uniform Commercial Code or any other law governing such sale;
(f) disclose any information about the Indebtedness, the Borrower, any
collateral, or any other guarantor or surety, or about any action or nonaction
of Lender; or (g) pursue any remedy or course of action in Lender's power
whatsoever. Grantor also waives any and all rights or defenses arising by reason
of (h) any disability or other defense of Borrower, any other guarantor or
surety or any other person; (i) the cessation from any cause whatsoever, other
than payment in full, of the Indebtedness; (j) the application of proceeds of
the Indebtedness by Borrower for purposes other than the purposes understood and
intended by Grantor and Lender; (k) any act of omission or commission by Lender
which directly or indirectly results in or contributes to the discharge of
Borrower or any other guarantor or surety, or the Indebtedness, or the loss or
release of any collateral by operation of law or otherwise; (l) any statute of
limitations in any action under this Agreement or on the Indebtedness; or (m)
any modification or change in terms of the Indebtedness, whatsoever, including
without limitation, the renewal, extension, acceleration, or other change in the
time payment of the Indebtedness is due and any change in the interest rate.
Grantor waives all rights and defenses arising out of an election of remedies by
lender, even though that election of remedies such as nonjudicial foreclosure
with respect to security for a guaranteed obligation, has destroyed Grantor's
rights of subrogation and reimbursement against Borrower by the operation of
Section 580d of the California Code of Civil Procedure, or otherwise. This
waiver Includes, without limitation, any loss of rights Grantor may suffer by
reason of any rights or protections of Borrower In connection with any
anti-deficiency laws, or other laws limiting or discharging the Indebtedness or
Borrower's obligations (including, without limitation, Section 726, 580a, 580b,
and 580d of the California Code of Civil Procedure). Grantor waives all rights
and protections of any kind which Grantor may have for any reason, which would
affect or limit the amount of any recovery by Lender from Grantor following a
nonjudicial sale or judicial foreclosure of any real or personal property
security for the Indebtedness Including, but not limited to, the right to any
fair market value hearing pursuant to California Code of Civil Procedure Section
580a. Grantor understands and agrees that the foregoing waivers are waivers of
substantive rights and defenses to which Grantor might otherwise be entitled
under state and federal law. The rights. and defenses waived Include, without
limitation, those provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Grantor acknowledges that
Grantor has provided these waivers of rights and defenses with the Intention
that they be fully relied upon by Lender. Until all Indebtedness Is paid In
full, Grantor waives any right to enforce any remedy Lender may have against
Borrower or any other guarantor, surety, or other person, and further, Grantor
waives any right to participate in any collateral for the Indebtedness now or
hereafter held by Lender.
If now or hereafter (a) Borrower shall be or become Insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Grantor hereby forever waives and relinquishes In favor of
Lender and Borrower, and their respective successors, any claim or right to
payment Grantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Grantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security Interest In
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor's
right, title and Interest In and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor may open In the future, excluding,
however, all XXX and Xxxxx accounts, and all trust accounts for which the grant
of a security Interest would be prohibited by law. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all Indebtedness
against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to perfect
and continue Lender's security Interest In the Collateral. Upon request of
Lender, Grantor will deliver to Lender any and all of the documents evidencing
or constituting the Collateral, and Grantor will note Lender's interest upon any
and all chattel paper If not delivered to Lender for possession by Lender.
Grantor hereby appoints Lender as Its Irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue the
security interest granted In this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as a
financing statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lender's security Interest
in the Collateral. Grantor promptly will notify Lender before any change In
Grantor's name Including any change to the assumed business names of Grantor.
This Is a continuing Security Agreement and will continue In effect even though
all or any part of the Indebtedness Is paid In full and even though for a period
of time Borrower may not be Indebted to Lender.
No Violation. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and Its
articles or agreements relating to entity Incorporation, organization or
existence do not prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of accounts,
chattel paper, or general Intangibles, the Collateral Is enforceable in
accordance with Its terms, Is genuine, and compiles with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are In fact obligated as they appear to be on the Collateral.
Location of the Collateral. Grantor, upon request of Lender, will deliver to
Lender In form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, Including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d) all
other properties where Collateral Is or may be located. Except In the ordinary
course of Its business, Grantor shall not remove the Collateral from Its
existing locations without the prior written consent of Lender.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent the
Collateral consists of Intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of Its
business, Including the sales of Inventory, Grantor shall not remove the
Collateral from Its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action-which would require
application for certificates of title for the vehicles outside the State of
California, without the prior written consent of Lender.
Transactions Involving Collateral. Except for Inventory sold or accounts
collected In the ordinary course of Grantor's business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor
Is not In default under this Agreement, Grantor may sell Inventory, but only In
the ordinary course of Its business and only to buyers who quality as a buyer In
the ordinary course of business. A sale In the ordinary course of Grantor's
business does not Include a transfer In partial or total satisfaction of a debt
or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security Interest, encumbrance,
or charge, other than the security Interest provided for In this Agreement,
without the prior written consent of Lender. This Includes security interests
even If junior In right to the security Interests granted under this Agreement.
Unless waived by Lender, all proceeds from any disposition of the Collateral
(for whatever reason) shall be held In trust for Lender and shall not be
commingled with any other funds provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall Immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants 16 Lender that It holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral Is on file In any public office other than those which reflect
the security Interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights In the Collateral
against the claims and demands of all other persons.
Collateral Schedules and Locations. Insofar as the Collateral consists of
Inventory, Grantor shall deliver to Lender, as often as Lender shall require,
such lists, descriptions, and designations of such Collateral as Lender may
require to Identify the nature, extent, and location of such Collateral. Such
Information shall be submitted for Grantor and each of Its subsidiaries or
related companies.
Maintenance and Inspection of Collateral. Grantor shall maintain all tangible
Collateral In good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and Its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall Immediately notify Lender of all cases Involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings.
Compliance With Government Requirements. Grantor shall comply with all laws,
ordinances, rules and regulations of all governmental authorities, now or
hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened released of any hazardous waste or
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of
1986, Pub.L.No.99-499 ("XXXX"), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq. Chapters 6.5 through 7.7 of Division of the
California Health and safety Code, Section 25100, et seq., or other applicable
state or Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. The terms "hazardous waste" and "hazardous substance" shall also
Include, without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos. The representations and warranties contained herein are
based on Grantor's due diligence In Investigating the Collateral for hazardous
wastes and substances. Grantor hereby (a) releases and waives any future claims
against Lender for Indemnity or contribution In the event Grantor becomes liable
for cleanup or other costs under any such laws, and (b) agrees to Indemnity and
hold harmless Lender against any and all claims and losses resulting from a
breach of this provision of this Agreement. This obligation to Indemnity shall
survive the payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks
Insurance, Including without limitation fire, theft and liability coverage
together with such other Insurance as Lender may require with respect to the
Collateral, In form, amounts, coverages and basis reasonably acceptable to
Lender and Issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of Insurance In form satisfactory to Lender, Including
stipulations that coverages will not be cancelled or diminished without at least
ton (10) days' prior written notice to Lender and not Including any disclaimer
of the Insurer's liability for failure to give such a notice. Each Insurance
policy also shall Include an endorsement providing that coverage In favor of
Lender will not be Impaired In any way by any act, omission or default of
Grantor or any other person. In connection with all policies covering assets In
which Lender holds or Is offered a security Interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. If
Grantor at any time falls to obtain or maintain any Insurance as required under
this Agreement, Lender may (but shall not be obligated to) obtain such Insurance
as Lender deems appropriate, Including If It so chooses "single Interest
Insurance," which will cover only Lender's Interest In the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any
material loss or damage to the Collateral. Lender may make proof of loss If
Grantor falls to do so within fifteen (15) days of the casualty. All proceeds of
any Insurance on the Collateral, including accrued proceeds thereon, shall be
held by Lender as part of the Collateral. If Lender consents to repair or
replacement of the damaged or destroyed Collateral, Lender shall, upon
satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds
for the reasonable cost of repair or restoration. If Lender does not consent to
repair or replacement of the Collateral, Lender shall retain a sufficient amount
of the proceeds to pay all of the Indebtedness, and shall pay the balance to
Grantor. Any proceeds which have not been disbursed within six(6) months after
their receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness on a material portion
of the collateral.
Insurance Reserves following an event of default Lender may require Grantor to
maintain with Lender reserves for payment of Insurance premiums, which reserves
shall be created by monthly payments from Grantor of a sum estimated by Lender
to be sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the Insurance premiums to be paid. If fifteen
(15) days before payment Is due, the reserve funds are Insufficient, Grantor
shall upon demand pay any deficiency to Lender. The reserve funds shall be held
by Lender as a general deposit and shall constitute a non-interest-bearing
account which Lender may satisfy by payment of the Insurance premiums required
to be paid by Grantor as they become due. Lender does not hold the reserve funds
In trust for Grantor, and Lender is not the agent of Grantor for payment of the
Insurance premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantor's sole responsibility. Insurance
Reports. Grantor, upon request of Lender, shall furnish to Lender reports on
each existing policy of Insurance showing such Information as Lender may
reasonably request Including the following: (a) the name of the Insurer; (b) the
risks Insured; (c) the amount of the policy; (d) the property Insured; (e) the
then current value on the basis of which Insurance has been obtained and the
manner of determining that value; and (f) the expiration date of the policy. In
addition, Grantor shall upon request by Lender (however not more often than
annually)have an Independent appraiser satisfactory to Lender determine, as
applicable, the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not Inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender Is
required by law to perfect Lender's security Interest In such Collateral. It
Lender at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care In
the custody and preservation of the Collateral If Lender takes such action for
that purpose as Grantor shall request or as Lender, In Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights In the Collateral against prior parties, nor to protect, preserve or
maintain any security Interest given to secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, Including without limitation
all taxes, liens, security Interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for Insuring, maintaining and preserving the
Collateral. All such expenditures Incurred or paid by Lender for such purposes
will then bear Interest at the rate charged under the Note from the date
Incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable Insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be In addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
Under this Agreement.
Default on Indebtedness. Failure of Borrower to make any payment within five
days following the date due on the Indebtedness. Other Defaults. Failure of
Grantor or Borrower to comply with or to perform any other term, obligation,
covenant or condition contained In this Agreement or In any of the Related
Documents or failure of Borrower to comply with or to perform any term,
obligation, covenant or condition contained In any other agreement between
Lender and Borrower. Default In Favor of Third Parties. Should Borrower or any
Grantor default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement for money borrowed in excess
of $50,000.00, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's or any Grantor's ability to
repay the Loans or perform their respective obligations, under this Agreement or
any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Grantor or Borrower under this Agreement, the Note or
the Related Documents Is false or misleading in any material respect, either now
or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be In full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any time
and for any reason.
Insolvency. Continued in paragraph entitled "additional Provision". The
dissolution or termination of Grantor or Borrower's existence as a going
business, the Insolvency of Grantor or Borrower, the appointment of a receiver
for any part of Grantor or Borrower's property, any assignment for the benefit
of creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or Insolvency laws by or against Grantor or
Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or Borrower or by any governmental
agency against the Collateral or any other collateral securing the Indebtedness.
This Includes a garnishment of any of Grantor or Borrower's deposit accounts
with Lender. However, this Event of Default shall not apply If there is a good
faith dispute by Grantor or Borrower as to the validity or reasonableness of the
claim which Is the basis of the creditor or forfeiture proceeding and If Grantor
or Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, In an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any `guarantor of any of the indebtedness or such Guarantor dies or becomes
incompetent. Lender, at its option, may, but shall not be required to, permit
the Guarantor's estate to assume unconditionally the obligations arising under
the guaranty in a manner satisfactory to Lender, and, in doing so, cure the
Event of Default.
Adverse Change. A Material adverse change occurs in Borrower's financial
condition, or Lender reasonable believes the prospect of payment or performance
of the indebtedness is impaired.
Right to Cure. If any default, other than a Default on indebtedness, is curable
and if Grantor or Borrower has not been given a prior notice of a breach of the
same provision of the Agreement, it may be cured (and no Event of Default will
have occurred) if Grantor or `Borrower, after Lender sends written notice
demanding cure of such default, (a) cures the default within ten (10) days; or
(b) if the cure requires more than ten (10) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the California Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including
any prepayment penalty which Borrower would be required to pay, immediately due
and payable, without notice.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any
portion of the Collateral and any and all certificates of title and other
documents relating to the Collateral. Lender may require Grantor to assemble the
Collateral and make It available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter upon the property of Grantor
to take possession of and remove the Collateral. If the Collateral contains
other goods not covered by this Agreement at the time of repossession, Grantor
agrees Lender may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession. Sell the Collateral.
Lender shall have full power to sell, lease, transfer, or otherwise deal with
the Collateral or proceeds thereof In Its own name or that of Grantor. Lender
may sell the Collateral at public auction or private sale. Unless the Collateral
threatens to decline speedily In value or Is of a type customarily sold on a
recognized market, Lender will give Grantor reasonable notice of the time after
which any private sale or any other Intended disposition of the Collateral Is to
be made. The requirements of reasonable notice shall be met If such notice Is
given at least ten (10) days, or such lesser time as required by state law,
before the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, Including without limitation the expenses of
retaking, holding, Insuring, preparing for sale and selling the Collateral,
shall become a part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of expenditure until
repaid.
Appoint Receiver. To the extent permitted by applicable law, Lender shall have
the following rights and remedies regarding the appointment of a receiver: (a)
Lender may have a receiver appointed as a matter of right, (b) the receiver may
be an employee of Lender and may serve without bond, and (c) all fees of the
receiver and his or her attorney shall become part of the Indebtedness secured
by this Agreement and shall be payable on demand, with Interest at the Note rate
from date of expenditure until repaid.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver,
may collect the payments, rents, Income, and revenues from the Collateral.
Lender may at any time In its discretion transfer any Collateral into Its own
name or that of Its nominee and receive the payments, rents, Income, and
revenues therefrom and hold the same as security for the Indebtedness or apply
It to payment of the Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts, general Intangibles,
Insurance policies, Instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust,
xxx for, foreclose, or realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral Is then due. For these purposes,
Lender may, on behalf of and In the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and payments are
to be sent; and endorse notes, checks, drafts, money orders, documents of title,
Instruments and Items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify account debtors and
obligors on any Collateral to make payments directly to Lender. Obtain
Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may
obtain a judgment against Borrower for any deficiency remaining on the
Indebtedness due to Lender after application of all amounts received from the
exercise of the rights provided in this Agreement. Borrower shall be liable for
a deficiency even If the transaction described In this subsection Is a sale of
accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies It may have available at law, In equity, or
otherwise.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced by
this Agreement or the Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Grantor or Borrower under this Agreement, after Grantor or Borrower's failure to
perform, shall not affect Lender's right to declare a default and to exercise
its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth In
this Agreement.. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender In the State of California. If there Is a lawsuit, Grantor and Borrower
agree upon Lender's request to submit to the jurisdiction of the courts of San
Diego County, the Stale of California. Lender, Grantor and Borrower hereby waive
the right to any jury trial In any action, proceeding, or counterclaim brought
by either Lender, Grantor or Borrower against the other. (Initial Here) This
Agreement shall be governed by and construed in accordance with the laws of the
State of California.
Attorneys' Fees; Expenses. Grantor and Borrower agree to pay upon demand all of
Lender's costs and expenses, Including attorneys' fees and Lender's legal
expenses, Incurred In connection with the enforcement of this Agreement. Lender
may pay someone else to help enforce this Agreement, and Grantor and Borrower
shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender's attorneys' fees and legal expenses whether or not there Is a lawsuit,
Including attorneys' fees and legal expenses for bankruptcy proceedings (and
Including efforts to modify or vacate any automatic stay or Injunction),
appeals, and any anticipated post-judgment collection services. Grantor and
Borrower also shall pay all court costs and such additional fees as may be
directed by the court.
Caption Headings. Caption headings In this Agreement are for convenience
purposes only and are not to be used to
interpret or define the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations of Grantor and Borrower
under this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower, and all references to Grantor shall mean
each and every Grantor. This means that each of the persons signing below Is
responsible for all obligations In this Agreement.
Notices. All notices required to be given under this Agreement shall be given In
writing, may be sent by telefacsimile (unless otherwise required by law), and
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier or deposited In the United States mail, first
class, postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change Its address for notices under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice Is to change the party's address. To the extent
permitted by applicable law, If there Is more than one Grantor or Borrower,
notice to any Grantor or Borrower will constitute notice to all Grantor and
Borrowers. For notice purposes, Grantor and Borrower will keep Lender Informed
at all times of Grantor and Borrower's current address(es). Power of Attorney.
Grantor hereby appoints Lender as Its true and lawful attorney-in-fact,
Irrevocably, with full power of substitution to do the following: (a) to demand,
collect, receive, receipt for, xxx and recover all sums of money or other
property which may now or hereafter become due, owing or payable from the
Collateral; (b) to execute, sign and endorse any and all claims, Instruments,
receipts, checks, drafts or warrants Issued In payment for the Collateral; (c)
to settle or compromise any and all claims arising under the Collateral, and, in
the place and stead of Grantor, to execute and deliver Its release and
settlement for the claim; and (d) to file any claim or claims or to take any
action or Institute or take part in any proceedings, either In Its own name or
In the name of Grantor, or otherwise, which In the discretion of Lender may seem
to be necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred Is and shall be Irrevocable and
shall remain In full force and effect until renounced by Lender.
Preference Payments. Any monies Lender pays because of an asserted preference
claim In Borrower's bankruptcy will become a part of the Indebtedness and, at
Lender's option, shall be payable by Borrower as provided above In the
"EXPENDITURES BY LENDER" paragraph.
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be Invalid or unenforceable as to any person or circumstances, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefits
of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Grantor, shall constitute a waiver of any Lender's rights or of any
of Grantor's obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
Waiver of Co-obligor's Rights. If more than one person is obligated for the
indebtedness, Borrower irrevocably waives, disclaims and relinquishes all claims
against such other person which Borrower has or would otherwise have by virtue
of payment of the indebtedness or any part thereof, specifically including but
not limited to all rights of indemnity, contribution or exoneration.
ADDITIONAL PROVISION. Unless in the event of an involuntary bankruptcy,
proceeding, attachment, garnishment or appointment of receiver, such proceedings
shall be dismissed or vacated within sixty (60) days.
BORROWER AND GRANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT, AND BORROWER AND GRANTOR AGREE TO ITS TERMS.
THIS AGREEMENT IS DATED DECEMBER 29,1998.
BORROWER
BOATRACS,INC (SEAL)
Xxx Xxxxxxx, President/Chief Executive Officer/Director By(SEAL)Xxxxxxx
Xxxxxxxxx, Chairman of the Board/Director ENERDYNE TECHNOLOGIES INC, Co-Borrower
(SEAL) Xxx Xxxxxxx, President By:(SEAL) Xxxx XxXxxxxx, Chief Financial
Officer/Secretary GRANTOR (SEAL) Xxx Xxxxxxx, President/Chief Executive
Officer/Director Xxxxxxx Xxxxxxxxx, Chairman of the Board/Director ATTEST:
Secretary or Assistant Secretary( Corporate Seal )
BUSNESS ASSETS COLLATERAL DESCRIPTION
Debtor/Grantor: Boatracs, Inc.
The Description covers the following types or items of property:
All present and future right, title and interest of Debtor/Grantor in and to all
inventory, equipment, fixtures and other goods (as those terms are defined in
Division 9 of the California Uniform Commercial Code (the "UCC"), and whether
existing now or in the future) wherever located and including, without
limitation, such property now or in the future located at, upon or about, or
affixed or attached to or installed in, the real property at the following
locations: 00000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, XX 00000; 0000
Xxxxxxxx Xxxxxx, .Xxxxx X, Xxxxxx, XX 00000; 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx,
XX 00000; 0000X Xxxxxxxxxx Xxxxxx, 'Xxxxxxxx, XX 00000; Xxxxxxxxxxxx 0 xx, 0000
XX Xxxxxx, Xxx Xxxxxxxxxxx (the "Real Property"), or used or to be used in
connection with or otherwise relating to the business of Debtor/Grantor or the
Real Property, and all types of tangible personal property of any kind or nature
related thereto, and all accessories, additions, attachments, parts, proceeds,
products, repairs, replacements and substitutions of or to any of such property
(the "Goods", and together with the Real Property, the "Property"); and All
present and future right, title and interest of Debtor/Grantor in and to all
accounts, general intangibles, chattel paper, deposit accounts, money,
instruments and documents (as those terms are defined in the UCC) and all other
agreements, obligations, rights and written materials (in each case whether
existing now or in the future), including, without limitation, all such
accounts, general intangibles, chattel paper, deposit accounts, money,
instruments and documents now or in the future relating to or otherwise arising
in connection with or derived from the business of Debtor/Grantor or the
Property or the ownership, use, development, construction, maintenance,
management, operation, marketing, leasing, occupancy, sale or financing of the
business of Debtor/Grantor, the Real Property, or the Property, including (i)
permits, approvals and other governmental authorizations, (ii) improvement plans
and specifications and architectural drawings, (iii) agreements with
contractors, subcontractors, suppliers, project managers and supervisors,
designers, architects, engineers, sales agents, leasing agents, consultants and
property managers, (iv) warranties, guaranties, indemnities and insurance
policies, together with insurance payments and unearned insurance premiums, (v)
claims, demands, awards, settlements and other payments arising or resulting
from or otherwise relating to any insurance or any loss or destruction of,
injury or damage to, trespass on or taking, condemnation (or conveyance in lieu
of condemnation) or public use of the Real Property or any of the Property, (vi)
any cash collateral ac6ount maintained pursuant to any of the Loan Documents,
and any amounts deposited by Debtor/Grantor with Secured Party/Lender which are
to be held in any such cash collateral account, (vii) leases, rental agreements,
license agreements, service and maintenance agreements, purchase and sale
agreements and purchase options, together with advance payments, security
deposits and other amounts paid to or deposited with Debtor/Grantor under any
such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds,
rebates, discounts, cost savings, escrow proceeds, sale proceeds and other
rights to the payment of money, trade names, trademarks, goodwill and all other
types of intangible personal property of any kind or nature, and (x) all
supplements, modifications, amendments, renewals, extensions, proceeds,
replacements and substitutions of or to any of such property (the Intangibles").
Debtor/Grantor:BOATRACS, Inc.
By: Xxx Xxxxxxx, President/Chief Executive Officer/ Director
BY: Xxxxxxx X. Xxxxxxxxx, Chairman of the Board/Director
