SECURITY AGREEMENT FOR SUBSEQUENT NOTES
(Equipment and Inventory)
Section 1. Grant and Related Data.
(a) ------------------------, -------------------- and ---------, INC.
DBA ------------------------------
("Debtor"), hereby grants to UNITED RESOURCES, INC., an Oregon corporation
("Secured Party"), a security interest in the following described personal
property:
All of Debtor's fixtures and equipment now owned or hereafter acquired,
and proceeds of such fixtures and equipment; all of Debtor's
inventories of every kind and nature now or hereafter acquired and kept
or held by Debtor, and the proceeds of such inventories; and all
substitutions, additions, replacements, parts, equipment and
accessories now or hereafter affixed to or used in connection therewith
("Collateral"),
to secure (i) the payment of Debtor's Installment Note of even date herewith in
the amount of $-----.-- payable to the order of Secured Party at the times and
in the amounts therein provided; and (ii) any renewals, modifications or
amendments thereof; and (iii) to secure all other present and hereafter incurred
indebtedness of Debtor to Secured Party.
(b) The Collateral is bought or used primarily for Debtor's
business purposes, and it will be permanently kept at --------------------,
---------, in the County of --------- State of Oregon, which is the address of
Debtor's place of business.
(c) The Collateral is not and will not be attached to real
estate so as to become a fixture.
(d) The Collateral consisting of inventory is maintained and
at all times will be maintained at a level of not less than $----.-- cost to
Debtor.
(e) As often as Secured Party shall require, Debtor shall
deliver to Secured Party such lists, descriptions, and designations of inventory
as Secured Party may require to identify the nature, extent, and location
thereof.
Section 2. Warranties, Covenants and Agreements.
Debtor warrants and covenants and it is understood by the parties that:
(a) Except for the security interest granted hereby, Debtor is
the owner of the Collateral free from any lien, security interest, or
encumbrance, and will defend the Collateral against the claims and demands of
all persons whomsoever.
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(b) Except as provided below in Paragraph (c) and in Paragraph
(d) with respect to inventory, Debtor will not sell, offer to sell, or otherwise
transfer or dispose of the Collateral or any part thereof or any interest
therein, or create or cause or permit to be created any lien, encumbrance or
security interest in or upon any part thereof.
(c) In the event that United Resources, Inc. advances
additional sums or Debtor incurs subsequent indebtedness to United Resources,
Inc., Debtor hereby grants United Resources, Inc. a security interest in the
Collateral subordinate, in all respects, to the security interest granted hereby
in order to secure payment of such subsequent lending.
(d) While Debtor is not in default hereunder, Debtor may sell
inventory, but only in the ordinary course of business and only to buyers who
qualify as a buyer in the ordinary course of business. A sale in the ordinary
course of Debtor's business does not include a transfer in partial or total
satisfaction of a debt or any bulk sale.
(e) Debtor will keep the Collateral fully insured against loss
or damage by fire, and such other hazards as Secured Party may from time to time
require, with such deductible provisions, upon such terms, including loss
payable and other endorsements, and in such company or companies as Secured
Party may approve; and Debtor will immediately deliver all such insurance
policies to Secured Party to be retained while any indebtedness hereby secured
remains owing. Secured Party shall hold all such policies in pledge to secure
payment of the indebtedness hereby secured, with control to adjust any loss,
receive any receipt for any sum payable, surrender any policy, discharge and
release any insurer, endorse any loss or refund check or draft and, in general,
exercise in the name of Debtor or otherwise, any and all rights of Debtor in
respect thereto or in respect to the proceeds thereof.
(f) Debtor will maintain the Collateral in good condition and
repair and preserve the same against waste, loss, damage or depreciation in
value other than by reasonable wear. Secured Party may enter any premise in
which any of the Collateral may be kept at any reasonable time for the purpose
of inspecting the same. Debtor will not permit any use of any of the Collateral
in violation of any law or ordinance. Debtor will not, without the prior written
consent of Secured Party, cause or permit the Collateral or any part thereof to
be taken outside the state where permanently located as agreed in Section l(b)
or to be used for hire or under lease.
(g) Debtor will pay promptly when due all taxes, license fees
and governmental rates and charges upon or relating to any of the Collateral or
its use and relative to the indebtedness hereby secured.
(h) At its option, Secured Party may discharge taxes, liens,
security interests or other encumbrances upon any of the Collateral, may place
and pay premiums upon insurance on any of the Collateral and may incur expense
for maintenance and preservation of any of the Collateral. Debtor agrees to pay
to Secured Party upon demand all sums incurred or paid for any said purposes,
with interest from the date on which the same were incurred to the date of
payment at the rate of 18 percent per annum. Payment thereof is secured by the
Collateral.
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Section 3. General Provisions.
(a) The obligations which this Agreement secures are evidenced
by separate instruments which may be assigned, renewed, negotiated or extended
by Secured Party without releasing Debtor, the Collateral, or any guarantor or
co-maker.
(b) All of the terms of this Agreement and the rights,
remedies, and duties of the parties hereto shall be governed by the laws of
Oregon. If any provision of this Agreement is in conflict with the law of any
state having jurisdiction, the remaining parts hereof shall be effective as if
such provision had not been made.
(c) If any interest of Debtor in any of the Collateral shall
be transferred or if any indebtedness hereby secured shall be assigned, the
terms, covenants, and conditions hereof shall be binding upon and inure to the
benefit of the successors in interest of the parties hereto.
(d) If there be more than one Debtor or a guarantor or
co-maker, the liability of all such parties shall be primary and joint and
several.
(e) If Secured Party shall, once or often, extend the time for
paying any indebtedness hereby secured or fail promptly to exercise any right or
remedy it may have for any default hereunder or breach or violation hereof, such
indulgence or forebearance shall not be deemed a waiver of strict and prompt
performance by Debtor of all the terms and conditions hereof and shall not
preclude Secured Party from thereafter, without notice, exercising any right or
remedy for any subsequent breach or default in performance of the same or any
other provision hereof or for any other breach or violation of this Agreement.
(f) If any notice is given to Secured Party, it shall be given
by registered or certified mail directed to Secured Party at the place where
indebtedness hereby secured is payable. If any notice is to be given to Debtor,
mailing by registered or certified mail to the address stated above shall be
sufficient unless Secured Party shall have received from Debtor notice in
writing of a change of address. Reasonable notice, when such notice is required,
shall be deemed to be five days' notice.
(g) Debtor will promptly notify Secured Party in writing of
any change in Debtor's business or residence address.
Section 4. Default.
Debtor shall be in default under this Agreement upon the
happening of any of the following events or conditions:
(a) If Debtor's inventory level falls below the stated value
of $-----.-- cost to Debtor.
(b) If Debtor shall fail to pay, when due, any installment of
principal or interest of any indebtedness owing by Debtor to Secured Party.
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(c) If Debtor shall fail to perform promptly at the time and
strictly in the manner provided by any covenant of Debtor contained in this or
any other agreement between Debtor and Secured Party.
(d) If any warranty, representation, or statement made by
Debtor to Secured Party is false in any material respect.
(e) If there shall be any uninsured loss, theft, substantial
damage, destruction, sale or encumbrance to or of any of the Collateral, or the
making of any levy, seizure or attachment thereof or thereon.
(f) If there shall be any dissolution, termination of
existence, insolvency, business failure, appointment of a receiver of any part
of the property of, assignment for the benefit of creditors by, or commencement
of any proceeding under any bankruptcy or insolvency law by or against Debtor or
guarantor or surety for Debtor.
(g) If Secured Party has reasonable cause to deem itself
insecure.
Section 5. Remedies.
Upon such default and at any time thereafter, Secured Party
shall have each and all of the rights and remedies granted to Secured Party by
the Uniform Commercial Code of Oregon or other applicable laws, by this
Agreement and by the Installment Note or Notes hereby secured, and Secured Party
may without notice declare any or all such Installment Notes immediately due and
payable and Secured Party may require Debtor to assemble the Collateral and make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties. Debtor agrees to pay all expenses,
including reasonable attorneys' fees incurred by Secured Party in taking,
holding, preparing for sale, and selling any of the Collateral, as well as
attorneys' fees and court costs in such amount as shall be adjudged reasonable
for services in the trial court and for services in any appellate court in any
suit or action to require performance or for the breach of this Agreement or
upon any Installment Note hereby secured.
In the construction of this Agreement, the singular shall include the
plural as the circumstances may require.
Signed in duplicate this --- day of -----, 1990.
SECURED PARTY: UNITED RESOURCES, INC.
By----------------------------
X. X. Xxxxxxx, President
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BORROWERS: ----------------------:
DBA --------------------------
By ---------------------------
, President
By----------------------------
, Secretary
INDIVIDUALLY:
------------------------------
------------------------------
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