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EXHIBIT 10.22
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AGREEMENT is made and entered into this 3rd day of
December, 1991, and between Transcrypt Acquisition Corporation, a Nebraska
corporation for itself ("TAC") and as General Partner of Transcrypt
Acquisition, Ltd., a Nebraska Limited Partnership ("TAC, Ltd.") ("Debtor"), and
Transcrypt International, Inc., a Nebraska corporation ("Corporation"), Xxxx
Xxxxxxxxxxxx and Xxxxxx Xxxxxxxxxxxx, individuals ("Principals"). The
Corporation and Principals are referred to collectively as "Secured Party."
WITNESSETH:
WHEREAS, Debtor is the owner of that real property in Lincoln,
Lancaster County, Nebraska, more particularly described on Exhibit "A",
attached hereto and incorporated herein by this reference ("Property"); and
WHEREAS, Debtor and Principals entered into a Real Estate Exchange
Agreement dated December 3rd, 1991 and Debtor and Principals have executed and
delivered Noncompete Agreements of even date herewith (all such agreements
incorporated by reference herein and referred to herein as "Agreements"); and
WHEREAS, Debtor has executed and delivered to Secured Party the
Promissory Note ("Note") of even date herewith for the principal sum of Seven
Hundred Thousand Dollars ($700,000.00), secured by a Deed of Trust, Assignment
of Rents and Security Agreement of even date herewith ("Deed of Trust") which
Debtor has executed and delivered to Secured Party covering all right, title,
and interest of Debtor in and to the Property and the improvements now or
hereafter erected thereon, together with all easements, rights and appurtenants
thereto, the terms and conditions of the Note and Deed of Trust are
incorporated herein by this reference; and
WHEREAS, Secured Party has required, as additional security for
repayment of the Note and the full and timely performance of all of Debtor's
obligations under the Agreements, a lien upon all primary collateral ("Primary
Collateral") as hereinafter defined, now owned or hereafter acquired by Debtor,
subject to no prior lien or encumbrance and a second lien upon all other
collateral ("Other Collateral") as hereinafter defined, now owned or hereafter
acquired by Debtor (Primary and Other Collateral referred to collectively as
"Collateral"), and Debtor desires to grant to Secured Party such liens upon the
Primary and Other Collateral as additional security for the Note and Debtor's
obligations under the Agreement; and
WHEREAS, Debtor purchased the Property and the Collateral from Secured
Party so the security interest created hereunder is a purchase money security
interest.
NOW, THEREFORE, in consideration of the Agreements and the Note and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Debtor, for itself, its successors and assigns, has
bargained and sold, and by these presents does grant, bargain, sell and convey
unto Secured Party a security interest in the Primary and Other Collateral and
the proceeds thereof described in Exhibit "B", attached hereto and incorporated
herein by this reference.
This Security Agreement is made for the purpose of securing:
1. The payment of the indebtedness evidenced by the Note;
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2. The payment of all other sums and interests thereon
becoming due and payable to Secured Party under the provisions hereof
or under the provisions of the Note, Deed of Trust and the Agreements;
3. The performance and discharge of each and every
obligation, covenant and agreement of the Debtor herein, in said Note,
Deed of Trust, Agreements, and in any other security agreement executed
by the Debtor evidencing or securing the Note, or any agreement
incorporated by reference in any of them;
4. The repayment of all sums or amounts that are advanced
or extended by Secured Party, its successors and assigns, for the
maintenance or preservation of the Collateral, or any part thereof;
5. The payment of all amounts due under all extensions or
renewals, and successive extensions or renewals, of the Note or the
indebtedness represented thereby or under the Agreements, or of any
other or further indebtedness at any time owing by Debtor to Secured
Party, however the same may be advanced, and in whatever form it may
be, whether represented by notes, drafts, open accounts or otherwise,
and all interest thereon, for payment of which this Agreement shall
stand as continuing security until full and complete payment shall have
been made.
Debtor declares and warrants to Secured Party that TAC is a duly
organized and validly existing corporation under the laws of the State of
Nebraska, TAC, Ltd. is a duly organized and validly existing partnership under
the laws of the State of Nebraska, and that the execution, delivery and
performance hereof are within Debtor's corporate, partnership or individual
powers, have been duly authorized, are not on contravention of law or the terms
of Debtor's articles, bylaws, or other indenture papers or of any indenture,
agreement or undertaking to which Debtor is a party, or by which it is bound.
Further Debtor declares and warrants that it is the absolute owner and in
possession of all the Collateral, and that said Primary Collateral is free and
clear of all prior liens, encumbrances, security interests, and adverse claims,
and Debtor shall and will warrant and defend the title to said Primary
Collateral against the claims of all persons whomsoever. Without the written
consent of Secured Party, Debtor will not permit any other lien, encumbrance,
security interest or adverse claim to attach to the Collateral, except as may be
attached to the Other Collateral on the date hereof. Debtor warrants and
represents that the Collateral will be used primarily for business purposes.
Debtor further warrants that no financing statement covering the Primary
Collateral is on file in any public office, and, at the request of Secured
Party, Debtor will join Secured Party in executing one or more financing
statements pursuant to the Nebraska Uniform Commercial Code, in form
satisfactory to Secured Party, and Debtor will pay the cost of filing in all
public offices wherever filing is deemed necessary be Secured Party. Debtor will
not permit any tangible Collateral to be located in any state (and, if county
filing is required, in any county) in which a financing statement covering such
Collateral is required to be, but has not in fact been, filed in order to
perfect the Security Interest.
Concurrently with the execution hereof, or at such times as Secured
Party shall require, Debtor agrees to deliver to Secured Party or a designated
Escrow Agent any of the Primary Collateral identified by Secured Party which
must be possessed by the Secured Party in order to perfect the security
interest granted hereby. Additionally, Debtor agrees to execute and file with
the appropriate state or federal agencies any and all further instruments,
documents, collateral assignments and agreements reasonably requested by
Secured Party and necessary to perfect Secured Party's interest granted hereby.
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Debtor promises and agrees: To pay the principal sum of the Note and to
pay and perform the obligations under any of the Agreements, together with the
interest thereon, at the time and in the manner therein provided, and to pay
when due all sums secured hereby and to perform each and every covenant,
condition and provision contained in this agreement or in the Note and in the
Agreements each of which or incorporated herein by reference; to properly care
for and keep the Collateral in good condition, order and repair and insure
against loss and damage by fire and such other casualties as may be designated
by Secured Party, by insurers and in amounts approved by Secured Party, and
will assign the policies and certificates thereof to Secured Party, and, in
default thereof, it shall be lawful for Secured Party to effect such insurance
and the premiums paid for effecting the same, and all amounts incurred or
expended by Secured Party in that regard shall be a lien upon the Collateral
and added to the amount of the obligation secured by these presents, and
payable upon demand, with interest at the rate provided for in the Note;
(Debtor hereby assigns to Secured Party all proceeds of any insurance not
exceeding the unpaid balance hereunder and directs any insurer to pay all
proceeds directly to Secured Party and authorizes Secured Party to endorse any
draft of the proceeds); to pay all taxes, liens or assessments of whatever kind
or description that may be levied against the Collateral, or any part thereof,
before the same shall by law become delinquent; to comply with and use said
property in strict conformity with all laws, ordinances, regulations and
statutes applicable thereto.
Unless and until all amounts due and owing Secured Parties under the
Note, Deed of Trust and Agreements, including any other agreements incorporated
by reference in any of them are paid in full and this Security and Pledge
Agreement is terminated and, except as to action which the Principals shall
otherwise consent to, in advance and in writing, Debtor agrees that it will do
all of the following:
1. maintain the corporate existence of TAC and partnership
existence of TAC, Ltd. as separate operating entities and not
dissolve or merge TAC and/or TAC, Ltd. with or into any other entity
such that TAC and/or TAC, Ltd. cease separate legal existence;
2. not sell or assign, transfer, hypothecate, pledge or
otherwise cancel, novate or encumber any tangible or intangible assets,
including but not limited to the Primary Collateral and Other
Collateral, whether real or personal, of TAC or TAC, Ltd. during the
term hereof, except only such assets (a) which are replaced with other
assets of comparable value and used for comparable purposes; (b) which
have ceased to be used for Debtor's business and are sold for
consideration not significantly less than fair market value, if any; (c)
which are sold in the ordinary course of business for consideration not
significantly less than their fair market value; (d) which have become
obsolete or are inoperative or require repairs which, in Debtor's
judgment, will not be cost effective; or (e) which are hypothecated,
pledged or encumbered for purchase money debt incurred in the purchase
of new or additional assets or facilities and during the term hereof to,
in addition, specifically maintain and preserve the rights to technology
and royalties established under the Agreements between Xxxx Xxxxxxxxxxxx
and Corporation dated October 31, 1984, which Agreements are being
purchased by Debtor in a form in which the same can be validly
reassigned to and exercised in full by Principals, as their interest may
appear in the event of default hereunder;
3. perform all of its material contracts and commitments
substantially in accord with their terms and to pay all material
obligations, for the payment of money, within 60 days after the date
they are due unless such performance or the
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obligation to pay any such amount is disputed in good faith; and to
promptly pay and discharge all taxes and liens before the same become
delinquent unless the obligation to pay any such amount is disputed in
good faith, and to pay or satisfy all judgments promptly when the same
become final and not permit the same to proceed to execution;
4. pay and discharge all taxes, liens or assessments of
whatever kind or description and governmental charges or levies imposed
upon Debtor with respect to the Collateral prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any of the Collateral; provided, however,
that Debtor shall not be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by
proper proceedings so long as adequate reserves have been established
therefor;
5. provide copies of all financial statements and reports
which Debtor provides to any bank or financial institution in connection
with any loan agreement governing any financing arrangements for TAC or
TAC, Ltd. existing on or after the date hereof, including monthly
financial statements and sales forecasts.
Except for removal and storage of software and intangibles for backup
at locations disclosed to Secured Party, and retention in escrow as may be
required to perfect Secured Party's security interest therein, Debtor shall not
have the right, power or authority to and will not sell or otherwise dispose of
or remove from the location described above any of the Collateral without the
prior written consent of Secured Party; any such removal, without such consent,
to be construed as a breach hereof, the same as if a default were made in the
payment of any amount secured hereunder, and the entire amount then unpaid
shall immediately become due and payable. Notwithstanding any provision herein
to the contrary, so long as no Event of Default has occurred and there has not
been a revocation by Secured party of Debtor's right to do so, Debtor may sell
any inventory constituting Collateral to buyers in the ordinary course of
business. If Debtor fails to make any payment or perform any act which it is
obligated to perform under the provisions of this Agreement, Secured Party,
without demand or notice to Debtor or any successor in interest of Debtor, may
make such payment or perform such acts and incur any liability or expend
whatever amounts as it may, in its absolute discretion, deem necessary
therefor, and all sums incurred or expended by Secured Party, or its
successors, under the terms of this Agreement, shall immediately become due and
payable by Debtor to Secured Party, or its successor in interest, when so
incurred or expended and shall bear interest at the rate provided for in the
Note and shall be secured hereby.
The parties recognize that portions of the Collateral may become
inadequate, obsolete, worn out, unsuitable or unnecessary in the operation of
the business operated upon the Property. Debtor shall promptly renew, repair or
replace any inadequate, obsolete, worn out or unsuitable property in which this
security interest is given (subject to the preceding paragraph).
Upon the happening of any of the following events or conditions
("Events of Default"):
1. Subject to grace periods set forth in the Note, Deed of
Trust or the Agreements, if inconsistent herewith, default in the
payment or performance of any of the obligations, or of any covenant or
liability contained in or referred to in the Note, Deed of Trust or the
Agreements or any other agreement incorporated by reference in any of
them secured hereunder or any loan agreement or note with a
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bank or financial institution existing on or after the date hereof;
2. Dissolution, termination of existence, insolvency, business
failure, appointment of a receiver of any part of the property of
Debtor, assignment of any of the Debtor's assets for the benefit of
creditors by, the commencement of any proceedings under any bankruptcy
or insolvency law by or against Debtor; or
3. The transfer or assignment of all or substantially all of
Debtor's assets, or in the event that Debtor shall effect, whether by
merger, consolidation, sale by public or private offering or otherwise,
a change in control which has the effect of transferring 30% or more of
the voting common stock and/or partnership interests of Debtor or its or
their successors to persons, firms or entities who were not holders of
such securities immediately prior to the date on which such merger,
consolidation, sale or other action was effective;
4. A representation or warranty made by Debtor in this Agreement is
materially false or shall become false;
5. A breach by Debtor in the observance or performance of any of
the affirmative covenants as set forth herein, other than nonpayment
under the Note or Agreements, which is not remedied within thirty (30)
days following receipt of written notice thereof from Secured Party to
Debtor, provided that Secured Party may allow such time period, or no
period at all, as the Secured Party may reasonably determine to be
appropriate, in the case of repeated defaults or in the event Debtor is
in default in more than one or its obligations hereunder simultaneously
or in the event such breach occurs under facts and circumstances where
the magnitude of the harm threatened is very great and is reasonably
likely to occur if the 30-day cure period is allowed;
6. Events occur or conditions exist which cause the National Bank
of Commerce or other commercial lender as note holder of a promissory
notice of Debtor to declare a default and to initiate action to secure
or otherwise proceed against the collateral pledged thereunder.
6. Any other default under the terms hereunder;
and the Debtor's failure to cure such Events of Default within five business
(5) days after delivery to Debtor of a written notice from the Secured Party,
Secured Party, its successors or assigns, may exercise any one or more of the
following rights, or any combination of any of the following rights:
1. Without notice or demand and without the necessity of having a
receiver appointed and without regard to the adequacy or inadequacy of
any security for the indebtedness or the solvency or insolvency of the
Debtor, or any guarantor, at any time may take possession of the
Collateral and repair, care for, lease, manage, use or operate the
Collateral and perform any act necessary to collect the rents, issues,
income and profits thereof and apply the proceeds in the manner
specified herein upon sale of the Collateral.
2. Declare all sums secured hereby immediately due and payable and
may exercise any or all of the rights and remedies available to a
secured party under the Uniform Commercial Code as provided in the
statutes of the State of Nebraska, and it may, at its option, enter upon
the premises where said Collateral may be and take such measures as to
Secured Party may be deemed necessary or proper for the care
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or protection thereof and remove and/or dispose of said Collateral at
either public or private sale (the Debtor hereby expressly waiving
demand). Secured Party, its successors or assigns, may become the
purchaser and, from the proceeds of said sale, retain all costs and
charges (including attorneys' fees) incurred in the taking or sale of
said Collateral and in the care and protection thereof, and may apply
the balance toward the payment of all sums due Secured Party and secured
hereby and shall dispose of the surplus remaining as provided by law.
Any requirement of reasonable notice of and disposition of the
Collateral shall be satisfied if such notice is mailed by regular mail
to the address of Debtor shown in this Agreement at least five days
prior to the time of such public or private sale;
3. Be entitled as a matter of right, in addition to the
foregoing, to the appointment of a receiver by a court of competent
jurisdiction to assist it in performing and doing any acts hereinabove
set forth. All expenses of such receiver (including reasonable
attorneys' fees) shall likewise become immediately due and payable by
Debtor to Secured Party, or its successors in interest, shall bear
interest at the rate provided by the Note and shall be secured hereby.
The taking of possession of the Collateral and the receipt of any
income provided for herein shall not cure or waive any default, or notice of
default, or invalidate any act done pursuant to such notice.
Failure on the part of Secured Party to demand the entire payment after
the happening of any default shall not be deemed a waiver by Secured Party of
its rights to make immediate demand for the entire amount remaining unpaid, or
to exercise any right or remedy, or combination thereof, as provided in this
Agreement; and any payments made subsequent to a default, or the acceptance of
partial payment, shall not be deemed a waiver of such rights. The lien of this
Agreement shall continue until payment in full of the amounts secured by this
Agreement have been completed.
This Agreement shall be construed to be a lien against (1) any like or
similar property hereinafter acquired by Debtor, either as additions to or in
the place of the Collateral subject to this Agreement, and whether the
additions or substitutions be made with or without the knowledge or consent of
Secured Party, and (2) the proceeds of such after acquired property.
All remedies allowed Secured Party under the laws of the State of
Nebraska and under the terms of this Agreement are, and shall be, concurrent
and cumulative and may be exercised and enforced as hereinabove and as by law
provided, without reference to the time or manner of foreclosure or enforcement
of any other security for said indebtedness or obligations, whether held by
deed of trust, mortgage, pledge, security agreement or otherwise.
In this Agreement, whenever the context so requires, the masculine
gender includes the feminine and/or neuter and the singular number includes the
plural, and the term "Secured Party" shall include any future holder, including
pledgee, of the Note secured hereby.
The provisions hereof shall bind, and the benefits and advantages shall
inure to the respective successors and assigns of the parties hereto.
Secured Party may, at any time or from time to time, without liability
therefor and without notice, upon request of Debtor and without affecting the
personal liability of any person for the payment of the indebtedness secured
hereby, release any part of the
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collateral or join in any extension agreement or subordination agreement in
connection herewith. Secured Party shall have the right to inspect the
collateral at any time.
Neither this Agreement nor any provisions hereof may be amended,
modified, waived, discharged or terminated orally, nor may any of the
Collateral be released or the pledge of the security interest created hereby
extended, except by an instrument in writing duly signed by or on behalf of the
Debtor and Secured Party.
If any term or provision of this Agreement or the application thereof
to any person or circumstances shall to any extent be invalid or unenforceable,
the remainder of this Agreement for the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforced to the fullest extent permitted by
law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Nebraska.
IN WITNESS WHEREOF, Secured Party and Debtor have caused these presents
to be executed the day and year first above written.
DEBTOR: SECURED PARTY:
TRANSCRYPT ACQUISITION CORPORATION TRANSCRYPT INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx Xxxxxxxxxxxx
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Title: Chairman Title: President
--------------------------- --------------------------
TRANSCRYPT ACQUISITION CORPORATION, /s/ Xxxx Xxxxxxxxxxxx
as General Partner of ---------------------------------
TRANSCRYPT ACQUISITION, LTD.
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxxx Xxxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxxx
Title: Chairman
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EXHIBIT "A"
Legal Description
Lots One (1), Two (2), Three (3), and Four (4), Block Three (3), and
Lots Four (4), Five (5), and Six (6), Block Four (4), X.X. Xxxxxxxx'x
Subdivision, Lincoln Xxxxxxxxx Xxxxxx, Xxxxxxxx.
Xxxxx 00xx Xxxxxx from the North line of Clinton Street to the
Southeast railroad right of way of the OL & B, Lincoln, Lancaster County,
Nebraska.
All that portion of Clinton Street vacated by Ordinance No. 14647
adjacent to Xxx Xxx (0), Xxxxx Xxxxx (0), xxx Xxx Xxx (0), Xxxxx Four (4), X.X.
Xxxxxxxx'x Subdivision, except that portion described as follows:
BEGINNING at the intersection with a south line of vacated Clinton
Street and the east line of 00xx Xxxxxx; thence east along the south line of
vacated Clinton Street, a distance of 28.20 feet to the intersection with a
circular curve; thence northwesterly along the arc of said circular curve
bearing to the left, whose initial tangent deflects 114 degrees 43 minutes 04
seconds left, whose central angle is 37 degrees 59 minutes 17 seconds, whose
radius is 66.0 feet, a distance of 43.76 feet to the intersection with the
north-south extension of the east line of 00xx Xxxxxx; thence south along the
north-south extension of the east line of 20th Street, a distance of 31.98 feet
to the POINT OF BEGINNING.
Parts of Xxxx 0, 0 xxx 0, Xxxxx 0, X.X. Xxxxxxxx'x Subdivision and the
North One-Half (1/2) vacated Clinton Street, contiguous with south line said
lots, all in the Southwest Quarter (1/4), Section 13, Township 10 North, Range
6 East of the 6th Principal Meridian, Lincoln, Lancaster County, Nebraska,
described as follows:
Beginning at the southwest corner said Lot 7; thence southerly along
west lot line extended southerly a distance of 20.0 feet to the center line
vacated Clinton Street; thence south 89 degrees 00 minutes 00 seconds east
along centerline said street a distance of 110.47 feet to the arc of a curve;
said curve having a radius of 66.0 feet and a central angle of 38 degrees 43
minutes 51 seconds; thence northeasterly along arc said curve a distance of
44.61 feet to a point 0.50 feet south of southeast corner said Lot 9; thence
north 00 decrees 00 minutes 00 seconds east along east line said Lot 9 extended
south and east line said Lot 9, a distance of 135.50 feet to the northeast
corner said Lot 9; thence westerly along north line said Lot 9 a distance of
14.70 feet to the southeasterly right of way line of the Chicago Rock Island
and Pacific Railroad; thence southwesterly along said right of way a distance
of 165.52 feet to a point on the west line said Lot 7; thence southerly along
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said west lot line a distance of 37.26 feet to Point of Beginning. Containing
16,141 square feet more or less by computation.
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EXHIBIT "B"
Primary Collateral
All Technology Royalties/Rights as described as:
"All technology rights and retained royalty interests owned by
Xxxx Xxxxxxxxxxxx and transferred to Debtor, including but not
limited to, all know-how, trade secrets, copyrights,
uncopyrighted works, unpatented inventions and all proprietary
information rights and applications in whatever form existent
which derive therefrom, which are connected therewith, which are
now owned or hereinafter acquired or developed by Debtor, and
specifically including all right, title, and interest of Xxxx
Xxxxxxxxxxxx in and to the Royalty Agreement and the separate
Technology Agreement made and entered into on the 31st day of
October, 1984."
Other Collateral
Grant of Security Interest and Description of Collateral. "Debtor,
whether one or more, for consideration, grants to Secured Party, a security
interest in the following property, whether now owned or hereafter acquired by
Debtor, and any and all additions, accessions, substitutions or replacements
thereto or therefor and in all products and proceeds thereof ("Collateral"):
"Equipment. All equipment, including but not limited to,
tractors, trailers, non-titled vehicles, machinery, computer,
copying and telephone equipment, furniture, supplies, implements
and tools whether or not attached to the property described on
Exhibit "A" attached hereto and incorporated herein, but
excluding other fixtures and leasehold improvements including,
without limitation, all built-in furniture and installations,
shelving, partitions, doorstops, vaults, elevators, dumbwaiters,
window shades and coverings, venetian blinds, light fixtures,
fire hoses and brackets and boxes for the same, fire sprinklers,
alarm systems, drapery rods and brackets, screens, linoleum,
carpets, plumbing, heating units, stoves, ovens, water heaters
and incinerators placed upon or used in any way in connection
with the use, enjoyment and occupancy of or operations conducted
upon or within the real estate and improvements located thereon
described in Exhibit "A".
Inventory. All of Debtor's inventory including all goods,
merchandise, raw materials, goods in process, finished goods and
all other tangible personal property now owned or hereafter
acquired and held for sale or lease or furnished or to be
furnished under contracts of service or used or consumed in
Debtor's business and in contract rights with respect thereto
and proceeds of both (all hereinafter called the "Inventory").
Accounts, Instruments, Documents and Chattel Paper. All
accounts, notes, drafts, chattel paper, instruments, documents,
including documents of title, acceptances and other forms of
obligations and receivables now or hereafter received by or
belonging to Debtor of whatever nature and the proceeds thereof
(including those for goods or merchandise sold or services
rendered by it, all guaranties and securities therefor, all
right, title and interest of Debtor in the
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merchandise which gave rise thereto including the right of
stoppage in transit, and all rights of Debtor earned or yet to
be earned under contracts to sell goods or render services).
