Ex.10.07-Security Agreement
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into at Irvine,
California, as of the 30th day of July 2003 by and between RECLAMATION
CONSULTING AND APPLICATIONS, INC., a Colorado Corporation ("RCAI" or "Secured
Party") and NORTH AMERICAN SYSTEMS, INC., a Nevada Corporation ("NAS" or
"Debtor") with reference to the following facts:
A. Debtor has executed a Revolving Loan Agreement in favor of Secured Party
to evidence an outstanding debt owed by Debtor to Secured Party, and delivered
same to Secured Party, a copy of which is attached hereto (the "Loan
Agreement").
B. The purpose of this Security Agreement is to secure the full, faithful
and prompt payment by Debtor to Secured Party under the terms of the Loan
Agreement.
NOW THEREFORE, it is hereby agreed as follows:
1. Grant of Security Interest
Debtor hereby grants a security interest to and in favor of Secured Party, and
Secured Party retains a security interest in and to the Collateral (as
hereinafter defined in Paragraph 2) to secure the full, faithful and prompt
performance of the Loan Agreement. The security interest herein granted to, and
retained by, Secured Party shall be a lien and, except as otherwise provided
herein, shall attach to the Collateral immediately upon the execution hereof.
Debtor shall execute and deliver to Secured Party, for filing with California, a
California UCC Financial Statement, which Secured Party shall file.
2. Collateral
As used herein, the "Collateral" shall refer to the following: (i) All assets,
tangible and intangible, of NAS, wherever located; and (ii) all additions and
substitutions to or for the items referred to in (i) above; and (iii) all
proceeds therefrom; and (iv) if a part of the Collateral is inventory or
equipment, any after acquired inventory or equipment shall also be considered
Collateral (hereinafter collectively referred to as the "Collateral").
3. Books and Records; Inspection
Borrower shall keep and maintain, at its expenses, complete records of the
Collateral. Secured Party shall have the right at any time and from time to
time, without notice, to call at Borrower's place of business during normal
business hours to inspect the Collateral and to inspect the correspondence,
books, and records of Borrower relating to the Collateral.
4. Representations and Warranties of Borrower
Borrower represents and warrants to secured Party that, with respect to the
Collateral, Borrower posses and shall possess at all times while this Security
Agreement is in effect, full, complete and unencumbered title to such goods,
subject only to Secured Party's security interest hereunder.
5. Default
Debtor shall be deemed to be in "default" under this Agreement is Debtor fails
to pay any amount due under the Loan Agreement 90 days after written demand by
Secured Party to Debtor for such payment, or breaches any other provisions of
the Loan Agreement.
6. Rights Upon Default
6.1 Upon the occurrence of any Event of Default hereunder, Secured party, at
its option, may exercise any one or more of the cumulative rights and remedies
hereinafter set forth and any other right or remedy provided for in this
Agreement or available at law or in equity. Any one or more of such rights and
remedies may be exercised simultaneously or successively, and the initiation or
completion of any such exercise shall not constitute an election and shall not
stop or prevent the pursuit of any other right or remedy. Upon the occurrence
of any Event of Default hereunder Secured Party, in its discretion, may:
(a) Accelerate the maturity of, and declare immediately due and payable, the
full unpaid amount of Debtor's indebtedness to Secured Party under the Loan
Agreement and any other Secured Obligation;
(b) Enter on Debtor's premises to assemble and take possession of the
Collateral.
(c) Require Debtor to assemble the Collateral and make its possession
available to Secured Party at a place designated by Secured Party that is
reasonably convenient to both Debtor and Secured Party.
(d) Enter Debtor's premises, render the Collateral, if equipment, usable and
dispose of its in the manner provided by the Uniform Commercial Code of
California on Debtor's premises.
(e) Incur expenses, including reasonable attorney's' fees and related costs,
in the exercise of any right or remedy under or in connection with this
Agreement, including but not limited to expenses related to the protection of
Secured Party's security or the preservation of the Collateral. Debtor agrees
to pay, or reimburse Secured Party, for all such expenses and all such expenses
shall become a part of the Secured Obligations hereunder;
(f) Perform any obligation of Debtor hereunder, including but not limited to
the reasonable expenditure of any funds or the taking of any action which Debtor
is obligated to expend or take under or in connection with this Agreement.
(g) Notify any obligor or account debtor of the Debtor to make payments
directly to Secured Party and collect, by legal proceedings or otherwise and
endorse and receive all dividends, interest payments, proceeds and other sums
and property now or hereafter payable on account of the Collateral.
(h) Notify other interested persons, firms or corporations of the default
and of any of the Secured Obligations.
(i) Xxx Debtor for the performance, demand or satisfaction of any of the
Secured Obligations.
7. Miscellaneous
7.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
7.2 Assignment by Secured Party. Secured Party may assign its rights
under this Security Agreement and the security interest created by this Security
Agreement. Should Secured Party assign his rights under this Agreement or the
security interest created by this Agreement, Secured Party's assignee shall be
entitled, on written notice of the assignment being given by Secured Party to
Debtor, to all performance required of Debtor by this agreement and all payments
and monies secured by this Agreement.
7.3 Severability. Nothing contained in this Agreement shall be construed
as requiring or permitting the commission of any act contrary to law. Wherever
there is any conflict between any provision of this Agreement and any present or
future statute, law, ordinance, or regulation pursuant to which the parties have
no legal right to contract, the latter shall prevail, but in such event the
provisions of this Agreement thus affected shall be curtailed and limited only
to the extent necessary to bring them within the requirement of the law. In the
event that any part, article, paragraph or clause of this Agreement shall be
held to be indefinite or invalid, the entire \Agreement shall not fail on
account thereof, and the balance of the Agreement shall continue in full force
and effect.
7.4 Notices. Any and all notices, requests, demands and other
communications which are required or may be given under, or in connection with,
this Agreement shall be in writing and shall be deemed given when delivered in
person or when received if by telegraphic or other electronic means (including,
without limitation, telecopy or telex) or, if mailed, three business days after
being deposited in the United States mail, certified or registered mail, postage
prepaid, or if sent via Federal Express or similar courier service, two days
after being deposited therewith, addressed to the party to whom it is to be
given at the address hereinafter specified:
If to Debtor:
North American Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
If to Secured Party:
Reclamation Consulting & Applications, Inc.
00000 Xxxx xxxxx Xxxx., Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
Any party hereto may, by notice given as provided herein, change the address to
which, or the person to whose attention, notices shall be given.
7.5 Attorneys' Fees. In the event that any action, suit or
proceeding is brought under or in connection with this Agreement, the prevailing
party therein shall be entitled to its reasonable costs, expenses and attorneys'
fees (including the reasonable estimate of the allocable costs of in-house legal
counsel and staff).
7.6 Entire Agreement. This Agreement supersedes any and all oral and
written statements and representations and together with the Revolving Loan
Agreement contains the entire agreement among the parties hereto with respect to
the subject matter hereof and the transactions contemplated hereby.
7.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.8 Captions. Captions and paragraph heading used herein are for
convenience only, are not a part of this Agreement and shall not be used in
construing it.
7.9 Gender. Terms used herein in any number of gender include other numbers
or genders, as the context may require.
7.10 Defined Terms. All capitalized terms used herein shall have,
unless otherwise defined herein, the meaning attributed to them in the
Agreement.
7.11 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California as applied between residents
of the State of California entering into contracts to be performed wholly within
the State of California.
7.12 Construction. This Agreement shall be construed without regard to the
identity of the person who drafted the various provisions of the same. Each and
every provision of this Agreement shall be construed as though all of the
parties participated equally in the drafting of the same. Consequently, the
parties acknowledge and agree that any rule of construction that a document is
to be construed against the drafting party shall not be applicable to this
Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed s of the day and year
first above written.
SECURED PARTY DEBTOR
RECLAMATION CONSULTING & NORTH AMERICAN SYSTEMS, INC.
APPLICATIONS, INC.
By Title By Title
