EXHIBIT ▇▇.▇▇
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "SECURITY AGREEMENT") is entered into as
of March 31, 2000, by SBS TECHNOLOGIES, INC., a New Mexico corporation
("BORROWER"), and all Subsidiaries of Borrower now or at a future time executing
this Security Agreement on the signature pages hereof or on any amendments or
supplements hereto as listed on SCHEDULE A hereto, as SCHEDULE A is amended or
supplemented from time to time (the "SUBSIDIARY ASSIGNORS") (Borrower and the
Subsidiary Assignors being sometimes referred to herein individually as an
"ASSIGNOR" and collectively as "ASSIGNORS"), in favor of BANK OF AMERICA, N.A.,
formerly NationsBank, N.A., a national banking association ("LENDER").
W I T N E S S E T H:
WHEREAS, Borrower and Lender (under its prior name, NationsBank, N.A.)
have previously executed that certain Credit Agreement (as modified, amended or
supplemented or restated from time to time, the "CREDIT AGREEMENT") dated as of
December 1, 1998, pursuant to which Lender has made available to Borrower a
revolving credit loan facility, which currently is in an amount not to exceed
Twenty-Five Million and No/100 Dollars ($25,000,000.00), which Credit Agreement
has been amended by (i) Note Modification Agreement dated as of November 30,
1999, (ii) Modification of Credit Agreement, Guaranty Agreements and Related
Loan Documents dated as of January 31, 2000, and (iii) Second Modification of
Credit Agreement, Guaranty Agreements and Related Loan Documents (the "SECOND
MODIFICATION") of even date herewith, by and among Borrower, Lender, and the
Subsidiary Assignors as Guarantors thereunder (unless otherwise defined herein,
each term used herein with its initial letter capitalized shall have the meaning
given to such term in the Credit Agreement, as modified); and
WHEREAS, pursuant to the Second Modification, Lender has agreed to an
increase in the revolving credit facility to $30,000,000 and certain other
modifications to the Credit Agreement, the Guaranty Agreements and the other
Loan Documents upon the terms and conditions set forth therein; and
WHEREAS, in consideration for the agreement of Lender to to increase
the credit facility and to enter into the Second Modification, and in order to
provide additional collateral security for the Obligations, Lender has
requested, and it is a condition to the effectiveness of the Second
Modification, that Assignors enter into this Security Agreement, pursuant to
which each Assignor will assign certain of its assets comprising the Collateral
(hereinafter defined) as security for the Obligations under the Credit
Agreement; and
WHEREAS, each Assignor has determined that valuable benefits will be
derived by it as a result of the increase in the credit facility pursuant to the
Second Modification.
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NOW, THEREFORE, for and in consideration of the mutual covenants herein
and in the Second Modification and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Assignors covenant and agree with Lender as follows:
ARTICLE 1
GRANT OF SECURITY INTEREST,
DESCRIPTION OF COLLATERAL AND INDEBTEDNESS
1.1 ASSIGNMENT AND GRANT OF SECURITY INTEREST. Assignors hereby grant,
pledge and assign to Lender, and hereby grant to Lender a security interest in,
all of the Collateral (as hereinafter defined) of each Assignor, and all rights,
titles and interests of any Assignor therein, wherever located and whether now
owned or hereafter acquired by any Assignor or in which any Assignor now has or
at any time in the future may acquire any right, title or interest.
1.2 DESCRIPTION OF COLLATERAL. As used herein, the term "COLLATERAL"
shall mean and include the following:
(a) all accounts, accounts receivable, contract rights,
chattel paper, book debts, notes, drafts, instruments, documents, acceptances
and other forms of obligations now owned or hereafter received or acquired by or
belonging or owing to any Assignor (including under any trade names, styles or
divisions thereof) whether arising out of goods sold by it or services rendered
by it or from any other transaction, whether or not the same involves the sale
of goods or performance of services by such Assignor (including without
limitation, (i) any such obligation which would be characterized as an account,
general intangible or chattel paper under the UCC (as hereinafter defined), (ii)
any unbilled services rendered for which an invoice will later be created, and
(iii) all advances made by any Assignor on behalf of its customers for which
such Assignor is entitled to reimbursement or payment and for which an invoice
will be rendered) and all of any Assignor's rights in, to and under all invoices
now in existence or hereafter received or acquired by it for goods or services,
and all of any Assignor's rights to any goods represented by any of the
foregoing and all moneys due or to become due to any Assignor under all
contracts for the sale of goods and/or the performance of services by it
(whether or not yet earned by performance) or in connection with any other
transaction, now in existence or hereafter arising, including without limitation
the right to receive the Proceeds (as hereinafter defined) of said purchase
orders and contracts, and all collateral security and guarantees of any kind
given by any person or entity with respect to any of the foregoing, and all bank
accounts of any Assignor; and all customer lists, subscription lists, invoices,
agings, verification reports and other records relating in any way to such
accounts, all promissory notes (the "PLEDGED NOTES"), drafts, bills of exchange,
instruments, documents and trade acceptances (collectively, "INSTRUMENTS"), and
all deposit accounts, general intangibles, tax refunds and other obligations of
any kind owing to any Assignor (including under any trade names), now or
hereafter existing, arising out of or in connection with the sale or lease of
goods or the rendering of services or otherwise (including, without limitation,
any such obligations that would be characterized as an account, general
intangible or chattel paper under the UCC); and all rights now or hereafter
existing in and to all security agreements, leases, guarantees and other
contracts securing or otherwise relating to any of the foregoing (any and all
such accounts, instruments, deposit accounts, general intangibles
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and obligations described in this SECTION 1.2(a) being sometimes referred to
herein collectively as the "ACCOUNTS");
(b) all inventory in all of its forms, wherever located, now
or hereafter existing, including, but not limited to, (i) all raw materials and
work in process therefor, finished goods thereof, and materials used or consumed
in the manufacture or production thereof, (ii) goods in which any Assignor has
an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which any Assignor has an interest or
right as consignee), and (iii) goods which are returned to or repossessed by any
Assignor, and all accessions thereto and products thereof and documents therefor
(any and all such inventory, accessions, products and documents being referred
to herein collectively as "INVENTORY"); and
(c) all accessions to, all substitutions for and replacements
of, and all proceeds, and products of, and all monies, income and benefits
arising from or by virtue of, and all payments and distributions (cash or
otherwise) payable or distributable with respect to, any and all of the
foregoing Collateral (including, without limitation, proceeds which constitute
property of the types described in this SECTION 1.2) and, to the extent not
otherwise included, all (i) payments under insurance (whether or not Lender is
the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral and (ii) all cash, including, without limitation, all "proceeds" as
defined in Section 9.306(a) of the UCC (or, if numbered differently in the UCC
adopted in the jurisdiction(s) in which a UCC-1 Financing Statement related to
this Security Agreement is filed, the applicable section of such UCC)
(collectively, the "PROCEEDS").
As used herein "UCC" means the Uniform Commercial Code as in effect in the State
of New Mexico, as amended, or, if stated with reference to another jurisdiction
or the Uniform Commercial Code of another jurisdiction is applicable in the
given situation, the Uniform Commercial Code as in effect in such other
jurisdiction.
1.3 DESCRIPTION OF OBLIGATIONS. This Security Agreement creates an
assignment of and a security interest in the Collateral (the "SECURITY
INTEREST") securing the payment and performance of the Obligations under and as
defined in the Credit Agreement, which includes, without limitation, all
obligations and indebtedness arising under or pursuant to the Credit Agreement
(including without limitation the Second Modification), the Guaranty Agreements,
the Note, and the other Loan Documents, including any extensions, modifications,
substitutions, amendments, renewals and restatements thereof, whether for
principal, interest, fees, premium, expenses, indemnification or otherwise.
Without limiting the generality of the foregoing, this Security Agreement
secures the payment of all amounts which constitute part of the Obligations and
would be owed to Lender, but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Assignor or any other Person.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each Assignor represents and warrants to Lender with respect to itself
and the Collateral now owned or hereafter acquired by such Assignor that:
2.1 OWNERSHIP OF COLLATERAL, RIGHT TO PLEDGE AND ENFORCEABILITY. Such
Assignor (a) is the sole registered, legal and beneficial owner of such
Collateral and all rights and interests thereunder, (b) has the power and
authority to execute and deliver this Security Agreement and to pledge such
Collateral to Lender, and (c) is the appropriate person to originate any
instruction or order regarding the pledge or transfer of such Collateral. Such
Assignor further represents and warrants that the obligations of such Assignor
hereunder are rightful, legal, valid and binding obligations, enforceable in
accordance with their terms.
2.2 STATUS OF COLLATERAL GENERALLY. As of the later of the date hereof
or the date of delivery to Lender, of any of such Collateral hereunder and under
the Credit Agreement, the following are true (or will be true at such date, with
respect to such Collateral hereafter pledged to Lender): (a) such Assignor has
(or will have) good title to such Collateral; (b) except as disclosed to Lender,
such Collateral has not (or will not have) been materially altered (other than
accessions or other alterations to Inventory in the normal course of business);
(c) no defense of any party to performance under any contract which constitutes
Collateral is (or will be) good against such Assignor; (d) such Assignor has (or
will have) no knowledge of any insolvency proceeding instituted with respect to
the issuer, drawer, maker and/or acceptor; (e) such Assignor's transfer of such
Collateral to Lender, is (or will be) effective and rightful; (f) except as
disclosed to Lender, no other lien, adverse claim, pledges or option has been
created by such Assignor or is known to such Assignor to exist with respect to
any such Collateral, and, to the best of such Assignor's information and belief,
no financing statement, registered pledge or other security instrument is on
file in any jurisdiction covering such Collateral; and (g) such Assignor does
not (or will not) know of any fact which might impair the validity of such
Collateral or the Security Interest with respect to such Collateral.
2.3 LENDER'S SECURITY INTEREST. Each grant of the Security Interest in
and to such Collateral and each assignment or pledge of such Collateral pursuant
to this Security Agreement will, upon the giving of value by the Lender, create
a valid, binding, and perfected first priority (subject only to any Permitted
Liens) security interest in and lien on such Collateral securing the payment of
the Obligations and will be enforceable against such Assignor and all other
Persons.
2.4 NO CONSENTS. The execution, delivery and performance of this
Security Agreement are not in contravention of any indenture, agreement or
undertaking to which such Assignor is a party or by which such Assignor is bound
and no consents of any person are required to be obtained by such Assignor in
connection with the execution, delivery and performance of this Security
Agreement.
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2.5 NO APPROVALS. No authorization, approval or other action by, and no
notice to or filing with, any Tribunal or any other entity is required either
(a) for the grant by such Assignor of the security interest granted hereby or
for the execution, delivery or performance of this Security Agreement by such
Assignor, or (b) for the perfection of the Security Interest or exercise by
Lender of their rights and remedies hereunder.
2.6 PRINCIPAL PLACE OF BUSINESS. The principal place of business and
chief executive office of such Assignor, and the office where such Assignor
keeps its primary books and records, including those concerning the Accounts and
Contracts, is located at the address of Borrower shown on SCHEDULE B hereto, or
at such other address as is specifically set forth for such Assignor on SCHEDULE
B hereto. The Inventory and other goods comprising Collateral pledged by such
Assignor hereunder is located at the places specified on SCHEDULE B hereto or at
offices of such Assignor other than its principal place of business, provided
that each Assignor agrees upon the request of Lender from time to time to
furnish Lender a description of the Inventory and other goods (and approximate
value thereof) at each such other location. All promissory notes, including,
without limitation, the Pledged Notes, or other instruments evidencing the
Accounts have been pledged to Lender and delivered to Lender or a Custodian,
duly endorsed and accompanied by such duly executed instruments of transfer or
assignment as are necessary for such pledge, to be held as pledged collateral.
Other than such notes and instruments, each Assignor has possession and control
of the Collateral pledged by it hereunder.
2.7 TRADE NAMES. Such Assignor does not have or operate under any trade
names, except for any trade names set forth for such Assignor on SCHEDULE C
hereto.
2.8 ACCOUNTS. The amount represented by such Assignor to Lender from
time to time as owing by each account debtor or by all account debtors in
respect of the Accounts owned by such Assignor will at such time be, in all
material respects, the correct amount actually owing by such account debtor or
debtors thereunder. No amount payable to such Assignor under or in connection
with any such Account is evidenced by any instrument (as defined in the UCC) or
chattel paper (as defined in the UCC), other than checks and other similar
negotiable instruments and intercompany notes, which has not been delivered to
Lender.
2.9 POWER AND AUTHORITY; AUTHORIZATION. Such Assignor has the corporate
power and authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the Security Interest in such Collateral
pursuant to, this Security Agreement and has taken all necessary corporate
action to authorize its execution, delivery and performance of, and grant of the
Security Interest in such Collateral pursuant to, this Security Agreement.
2.10 ENFORCEABILITY. This Security Agreement constitutes a legal, valid
and binding obligation of such Assignor enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
2.11 NO CONFLICT. The execution, delivery and performance of this
Security Agreement will not violate any contractual obligations of such Assignor
and will not result in the creation or
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imposition of any encumbrance on any of the properties or revenues of such
Assignor or contractual obligations of such Assignor, except as contemplated
hereby.
ARTICLE 3
COVENANTS AND AGREEMENTS OF ASSIGNORS
Borrower covenants and agrees, and each Assignor with respect to itself
and the Collateral now owned or hereafter acquired by such Assignor, covenants
and agrees, as follows:
3.1 PERFECTION OF SECURITY INTEREST. Pursuant to the UCC, Borrower and
such Assignor shall take all action requested by Lender necessary to ensure the
validity and perfection of the Security Interest in such Collateral.
3.2 ASSIGNORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, such Assignor shall remain liable under each of the Accounts
and other items of Collateral it owns to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account. Lender shall
have no obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Security Agreement or the receipt
by Lender of any payment relating to such Account pursuant hereto, nor shall
Lender be obligated in any manner to perform any of the obligations of Assignors
under or pursuant to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
under any Account (or any agreement giving rise thereto), to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
3.3 NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. Upon the request
of Lender at any time during the continuation of an Event of Default, such
Assignor shall notify account debtors on the Accounts owned by such Assignor
that such Accounts have been assigned to Lender and that payments in respect
thereof shall be made directly to Lender. Lender may in its own name or in the
name of others, during the continuation of an Event of Default, communicate with
account debtors on such Accounts to verify with them to its satisfaction the
existence, amount and terms of any such Accounts.
3.4 COLLECTIONS ON ACCOUNTS. Lender hereby authorizes each Assignor to
collect the Accounts owned by such Assignor, subject to, during the continuation
of an Event of Default, Lender's direction and control, and Lender may during
the continuation of an Event of Default curtail or terminate said authority at
any time. If required by Lender at any time during the continuation of an Event
of Default, any payments of such Accounts, when collected by such Assignor,
shall be forthwith (and, in any event, within two business days) deposited by
such Assignor in the exact form received, duly indorsed by such Assignor to
Lender if required, in a special collateral account maintained by Lender,
subject to withdrawal by Lender only, as hereinafter provided, and, until so
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turned over, shall be held by such Assignor in trust for Lender, segregated from
other funds of such Assignor. All Proceeds while held by Lender (or by such
Assignor in trust for Lender) shall continue to be collateral security for all
of the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. If an Event of Default shall have occurred and be
continuing, at any time at Lender's election, Lender shall apply all or any part
of the funds on deposit in said special collateral account on account of the
Obligations in such order as Lender may elect, and any part of such funds which
Lender elects not so to apply and deems not required as collateral security for
the Obligations shall be paid over from time to time by Lender to such Assignor
or to whomsoever may be lawfully entitled to receive the same. If an Event of
Default shall have occurred and be continuing, at Lender's request, each
Assignor shall deliver to Lender all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to such
Accounts, including, without limitation, all original orders, invoices and
shipping receipts.
3.5 ANALYSIS OF ACCOUNTS. Lender shall have the right to make test
verifications of the Accounts owned by Assignors in any manner and through any
medium that it reasonably considers advisable, and each Assignor shall furnish
all such assistance and information as Lender may reasonably require in
connection therewith. At any time and from time to time, upon Lender's request
and at the expense of Borrower, but not more frequently than once in any
calendar quarter unless an Event of Default exists, Borrower shall cause
independent public accountants or others satisfactory to Lender to furnish to
Lender reports showing reconciliations, aging and test verifications of, and
trial balances for, such Accounts.
3.6 FURTHER ACTS AND ASSURANCES. From time to time Assignors shall
promptly execute and deliver to Lender all such other assignments, certificates,
supplemental writing, instructions, trust receipts, escrow agreements and
financing statements, and do all other acts or things as Lender may reasonably
request, in order more fully to establish, evidence and perfect the Security
Interest with respect to any and all items of the Collateral.
3.7 NO TRANSFER OR HYPOTHECATION. Without the prior written consent of
Lender, no Assignor will transfer its rights or interests in any Collateral,
sell, lease or otherwise dispose of any Collateral, or create any other lien or
security interest or otherwise encumber any of any Collateral, or release or
surrender any Collateral at any time, or permit any Collateral ever to be or
become subject to any lien, attachment, execution, sequestration, other legal or
equitable process, or any lien or encumbrance of any kind, except the Security
Interest and Permitted Liens. Assignors shall not send any notice to any Person
which may result in the creation of any other interest in the Collateral.
3.8 ENFORCEMENT. Borrower and each Assignor shall enforce each and
every obligation, term, covenant, condition and agreement in or pertaining to
the Collateral by any other party thereunder to be performed, and Borrower and
each applicable Assignor shall appear in and defend any action or proceeding
arising under, occurring out of or in any manner connected with the Collateral
or the obligations, duties or liabilities of any other party thereunder, and
upon request by Lender, Borrower and each Assignor will do so in the name and on
behalf of Lender, but at the expense of Borrower, and Borrower shall pay all
costs and expenses of Lender, including reasonable attorneys' fees and
disbursements, in any action or proceeding which Lender may appear. Without
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limiting the foregoing, Borrower shall pay any costs and expenses that Lender
incurs in attempting to foreclose its security interest in such Collateral.
3.9 COMPROMISE/MODIFICATION OF COLLATERAL. Such Assignor will not
adjust, settle or compromise any of the Collateral, except for such actions
taken in the ordinary course of business and that do not result in a material
reduction in the value of the Collateral taken as a whole, without the prior
written consent of Lender. No Assignor shall do anything to impair the rights of
Lender in any of the Collateral.
3.10 BOOKS AND RECORDS; INFORMATION. Borrower and each Assignor shall
keep accurate and complete books and records of the Collateral and such
Assignor's business and financial condition in accordance with GAAP. Each
Assignor shall from time to time at the request of Lender deliver to Lender such
information regarding such Collateral as Lender may request. Upon reasonable
notice, Borrower and each Assignor shall allow Lender or their agents, to
inspect all records of such Assignor relating to the Collateral or the
Obligations during normal business hours and to make and take away copies of
such records.
3.11 CHANGES. Borrower and each such Assignor shall promptly notify
Lender of any change in any material fact or circumstances warranted or
represented by Borrower or such Assignor in this Security Agreement or in any
other writing furnished by any Assignor in connection with the Collateral or the
Obligations.
3.12 CLAIMS. Borrower and each such Assignor shall promptly notify
Lender of any claim, action or proceeding affecting title to such Collateral, or
any part thereof, or the Security Interest, and at the request of Lender, appear
in and defend, at such Assignor's expense, any such action or proceedings, and
Assignors covenants that no such claims, actions or proceedings are pending or
threatened as of the date hereof.
3.13 COSTS. Borrower and Assignors shall promptly pay to Lender the
amount of all court costs and reasonable attorneys' fees incurred by Lender in
bringing any action for or on account of any breach, or to enforce or interpret
any of the terms, covenants or conditions, of this Security Agreement, or to
foreclose the Security Interest with respect to all or any part of the
Collateral.
3.14 INDEMNIFICATION. Borrower and Assignors agree to pay, and to save
Lender harmless from, any and all liabilities, costs and expenses (including,
without limitation, reasonable legal fees and expenses) (a) with respect to, or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (b) with respect to, or resulting from, any delay in complying with
any laws applicable to any of the Collateral or (c) in connection with any of
the transactions contemplated by this Security Agreement. In any suit,
proceeding or action brought by Lender under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, Borrower and each
Assignor will save, indemnify and keep Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by Borrower or any other Assignor of any
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obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Assignors.
3.15 COMPLIANCE WITH LAWS, ETC. Each Assignor will comply in all
material respects with all Legal Requirements (as hereinafter defined)
applicable to the Collateral or any part thereof and/or to the operation of such
Assignor's business; PROVIDED, HOWEVER, that an Assignor may contest any Legal
Requirements in any reasonable manner which shall not, in Lender's
determination, adversely affect Lender's rights or the priority of the Security
Interests in the Collateral.
LEGAL REQUIREMENTS means (a) any and all present and future
judicial decisions, statutes, laws, rulings, rules, orders, regulations,
permits, licenses, certificates, or ordinances of any Tribunal in any way
applicable to any Assignor, (b) the presently or subsequently effective bylaws
and articles of incorporation and any other form of business association
agreement of any Assignor, (c) any and all covenants, conditions or restrictions
applicable to the Collateral or the ownership, use or occupancy thereof, and (d)
any and all leases or contracts (written or oral) of any nature that relate in
any way to any Collateral, or any portion thereof, or to which any Assignor may
be bound, and in each case which, if violated, would materially and adversely
affect (i) the present or potential ownership, use, sale, occupancy or
possession of the Collateral or any part thereof, by any Assignor, (ii) the
Security Interest or (iii) the financial condition of any Assignor.
3.16 COMPLIANCE WITH TERMS OF CONTRACTS, ETC. Each Assignor will
perform and comply in all material respects with all its obligations under the
Accounts it owns and all its other contractual obligations relating to the
Collateral.
3.17 PAYMENT OF OBLIGATIONS. Borrower, and each Assignor with respect
to Collateral owned by it, will pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Collateral it owns or in respect
of the income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to such Collateral, except that no such charge need be
paid if (a) the validity thereof is being contested in good faith by appropriate
proceedings, (b) such proceedings do not involve any material danger of the
sale, forfeiture or loss of any of such Collateral or any interest therein and
(c) such charge is adequately reserved against on such Assignor's books in
accordance with GAAP.
3.18 LIMITATION ON LIENS ON COLLATERAL. Assignors will not create,
incur or permit to exist, will defend the Collateral it owns against, and will
take such other action as is necessary to remove, any encumbrance or claim on or
to such Collateral, other than the Security Interest, and will defend the right,
title and interest of Lender in and to any of such Collateral against the claims
and demands of all Persons whomsoever.
3.19 LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF AGREEMENTS
GIVING RISE TO ACCOUNTS. Without the prior written consent of Lender, which
consent shall not be unreasonably withheld, each Assignor will not (a) amend,
modify, terminate or waive any provision of any agreement giving rise to an
Account in any manner which could reasonably be expected to materially adversely
affect the value of such Account as Collateral, (b) fail to exercise promptly
and diligently each and every material right which it may have under each
agreement giving rise to an Account
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(other than any right of termination) or (c) fail to deliver to Lender a copy of
each material demand, notice or document received by it relating in any way to
any agreement giving rise to an Account.
3.20 LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business or as otherwise permitted under
the Credit Agreement, such Assignor will not grant any extension of the time of
payment of any of the Accounts, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partially, any party liable for
the payment thereof, or allow any credit or discount whatsoever thereon.
3.21 INVENTORY. Such Assignor shall keep all of the Inventory owned by
it at the place or places specified therefor in SECTION 2.6 or, upon thirty
days' prior written notice to Lender, at such other places in such jurisdiction
where all action required by Lender under SECTION 3.6 shall have been taken with
respect to such transferred Inventory. Such Assignor shall pay promptly when due
or before penalty all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral pledged by it hereunder as
provided in the Credit Agreement. Upon notice to such Assignor, the Lender, and
its respective officers, agents and representatives shall at all reasonable
times have the right to enter into and upon any premises where any of the
Inventory is located for the purpose of inspecting the same, observing its use
or otherwise protecting its interests therein.
3.22 INSURANCE. Such Assignor will, at its own expense, maintain, or
cause to be maintained, insurance on the Collateral as provided in the Credit
Agreement. If Lender shall be named as loss payee and additional insured on
insurance policies which pertain to the Collateral, and such insurance policy
shall contain a standard mortgage clause requiring at least 30 days notice to
Lender prior to cancellation thereof. If any Assignor fails to perform or
observe any applicable covenants as to insurance on any of such Collateral,
Lender may at its option obtain insurance on such Collateral, and any premium
therefor paid by Lender shall become part of the Obligations. Each Assignor
hereby grants Lender a security interest in any refunds of unearned premiums in
connection with any cancellation, adjustment or termination of any policy of
insurance required by Lender and in all proceeds of such insurance and hereby
appoints Lender its attorney-in-fact to, after the occurrence and during the
continuance of an Event of Default, endorse any check or draft that may be
payable to each Assignor in order to collect such refunds or proceeds. Any such
sums collected by Lender shall be credited, except to the extent applied to the
purchase by Lender of similar insurance, to any amounts then owing on the
Obligations.
3.23 PLACE OF PERFECTION; RECORDS. No Assignor will (i) change the
location of its chief executive office from that specified in SCHEDULE B, or
(ii) change its name, identity or corporate structure to such an extent that any
financing statement filed by Lender in connection with this Security Agreement
would become seriously misleading, or (iii) use any trade name other than those
listed on SCHEDULE C, unless such Assignor shall have given prior written notice
to Lender as soon as practicable thereof, and prior to effecting any such change
such Assignor shall have taken such steps as Lender may deem reasonably
necessary or advisable to continue the perfection and priority of the security
interest granted pursuant hereto.
Page 10
3.24 FURTHER IDENTIFICATION OF COLLATERAL. Each Assignor will furnish
to Lender from time to time upon request statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Lender may reasonably request, all in reasonable detail
and in form satisfactory to such requesting party.
ARTICLE 4
CERTAIN RIGHTS OF LENDER
4.1 PROCEEDS OF COLLATERAL. Should the Collateral, or any part thereof,
ever be in any manner converted by its issuer into another type of property or
any money or other proceeds ever be paid or delivered to any Assignor as a
result of any Assignor's rights in the Collateral, then, in any such event, all
such property, money, and other proceeds shall immediately be and become part of
the Collateral. In addition, if Lender deems it necessary and so requests,
Assignors shall properly endorse or assign any and all such other proceeds to
Lender and shall deliver to Lender any and all such other proceeds which require
perfection by possession under the UCC. With respect to any of such property of
a kind requiring an additional security agreement, financing statement, or other
writing to perfect a security interest therein in favor of Lender, Assignors
forthwith shall execute and deliver to Lender whatever Lender shall deem
necessary or proper for such purpose.
4.2 PRESERVATION OF COLLATERAL. Lender shall not have any duty to fix
or preserve rights against prior parties to the Collateral, and shall never be
liable for failure to use diligence to collect any amount payable with respect
to the Collateral, or any part thereof, but shall be liable only to account to
Assignors for what Lender may actually collect or receive thereon.
4.3 PRESERVATION OF SECURED INDEBTEDNESS. Lender shall not be liable
for its failure to use due diligence in the collection of the Obligations, or
any part thereof, or for its failure to give notice to any Assignor of default
in the payment of the Obligations, or any part thereof, or in the payment of or
upon any security whether pledged hereunder or otherwise.
4.4 OTHER SECURITY. Should any other Person have heretofore executed or
hereafter execute, in favor of any Lender any deed of trust, mortgage or
security agreement, or have heretofore pledged or hereafter pledge any other
property to secure the payment of the Obligations or the Note, or any part
thereof, the exercise by such Lender or any right or power conferred upon it in
any such instrument, or by any such pledge, shall be wholly discretionary with
it, and the exercise or failure to exercise any such right or power shall not
impair or diminish such Lender's rights, titles, interest, liens and powers
existing hereunder.
4.5 POWER OF ATTORNEY. Each Assignor hereby irrevocably constitutes and
appoints Lender and any officer or agent thereof, with full power of
substitution, effective upon the occurrence of an Event of Default and during
the continuance thereof, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of such Assignor or in its own name,
to take any and all action and to execute any and all documents and instruments
which Lender at any time and from time to time deems necessary or desirable to
accomplish the purposes of this
Page 11
Security Agreement and, without limiting the generality of the foregoing, each
Assignor hereby gives Lender the power and right on behalf of such Assignor and
in its own name to do any of the following, without notice to or the consent of
any Assignor:
(a) to demand, ▇▇▇ for, collect, or receive in the name of
such Assignor or in its own name, any money at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, documents
of title, or any other instruments for the payment of money under the
Collateral;
(b) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the Collateral , to
effect any repairs or any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and
(c) (i) to direct any parties liable for any payment under any
of the Collateral to make payment of any and all monies due and to become due
thereunder directly to Lender or as Lender shall direct; (ii) to receive payment
of and receipt for any and all monies, claims, and other amounts due and to
become due at any time in respect of or arising out of any Collateral; (iii) to
sign and endorse any assignments, proxies, bond powers, verifications, and
notices in connection with accounts and other documents relating to the
Collateral; (iv) to commence and prosecute any suit, action, or proceeding at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
Collateral; (v) to defend any suit, action, or proceeding brought against such
Assignor with respect to any Collateral; (vi) to settle, compromise, or adjust
any suit, action, or proceeding described above and, in connection therewith, to
give such discharges or releases as Lender may deem appropriate; (vii) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar, or other designated agency
upon such terms as Lender may determine; (viii) to add or release any borrower,
guarantor, indorser, surety, or other party to any of the Collateral; (ix) to
renew, extend, or otherwise change the terms and conditions of any of the
Collateral; and (x) to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, and to do, at
Lender's option and such Assignor's expense, at any time, or from time to time,
all acts and things which Lender deems necessary to protect, preserve, or
realize upon the Collateral and Lender's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Lender shall be under no duty to exercise or withhold the exercise
of any of the rights, powers, privileges, and options expressly or implicitly
granted to Lender in this Security Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Lender shall not be liable for any
act or omission or for any error of judgment or any mistake of fact or law in
its individual capacity or in its capacity as attorney-in-fact except acts and
omissions resulting from its gross negligence or willful misconduct. This power
of attorney is conferred on Lender solely to protect, preserve, and realize upon
the Security Interest in the Collateral. Lender shall not be responsible for any
decline in the value of the Collateral and shall not be required to take any
steps to preserve rights against
Page 12
prior parties or to protect, preserve, or maintain any security interest or lien
given to secure the Collateral.
4.6 PERFORMANCE BY LENDER. If any Assignor fails to perform or comply
with any of its agreements contained herein, Lender itself may, at its sole
discretion, cause or attempt to cause performance or compliance with such
agreement and the expenses of Lender, together with interest thereon at the
Default Rate shall be payable by such Assignor to Lender on demand and shall
constitute Obligations. Notwithstanding the foregoing, it is expressly agreed
that Lender shall not have any liability or responsibility for the performance
of any obligation of any Assignor under this Security Agreement.
4.7 NO DUTY ON THE PART OF LENDER. The powers conferred on Lender
hereunder are solely to protect the interests of Lender in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Assignor for any act or failure
to act hereunder, except for its own gross negligence or willful misconduct, IT
BEING THE INTENT OF THE PARTIES HERETO THAT LENDER SHALL NOT BE ACCOUNTABLE FOR
ITS OWN NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR OTHERWISE) OR FOR
STRICT LIABILITY WHICH MAY ARISE FROM ANY ACT.
4.8 PROCEEDS. If an Event of Default shall occur and be continuing (a)
all Proceeds received by any Assignor consisting of cash, checks and other
non-cash items shall be held by such Assignor in trust for Lender, segregated
from other funds of such Assignor, and shall, forthwith upon receipt by such
Assignor, be turned over to Lender in the exact form received by such Assignor
(duly indorsed by such Assignor to Lender, if required), and (b) any and all
such Proceeds received by Lender (whether from such Assignor or otherwise) may,
in the sole discretion of Lender, be held by Lender as collateral security for,
and/or then or at any time thereafter may be applied by Lender against, the
Obligations (whether matured or unmatured), such application to be in such order
as Lender shall elect. Any balance of such Proceeds remaining after the
Obligations shall have been paid and performed in full shall be paid over to
such Assignor or to whomsoever may be lawfully entitled to receive the same.
ARTICLE 5
REMEDIES
5.1 REMEDIES. The occurrence of an Event of Default under the Credit
Agreement shall constitute an Event of Default under this Security Agreement. If
an Event of Default shall occur and be continuing, Lender may exercise, in
addition to all other rights and remedies granted to Lender in this Security
Agreement or the Credit Agreement or in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the UCC. In addition to any and all other rights and
remedies that Lender may then have hereunder, under the UCC, or otherwise at law
or equity, Lender may at its option do any one or more of the following:
Page 13
(a) reduce its claim to judgment or foreclose or otherwise
enforce the Security Interest granted herein, in whole or in part, by any
available judicial procedure;
(b) after notification, if any provided for herein, dispose
of, at the office of Lender, on the premises of any Assignor or elsewhere, all
or any part of the Collateral, as a unit or in parcels by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Lender's power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations has been paid and performed in
full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;
(c) buy the Collateral, or any part thereof, at any public
sale;
(d) buy the Collateral, or any part thereof, at any private
sale if such Collateral is of a type customarily sold in a recognized market or
is of a type which is subject to widely distributed standard price quotations;
(e) apply by appropriate judicial proceedings for appointment
of a receiver for the Collateral, or any part thereof, and Assignors hereby
consent to any such appointment;
(f) at its discretion, but only if Lender has stated such
intent to do so in writing, retain the Collateral in satisfaction of the
Obligations whenever the circumstances are such that Lender are entitled to do
so under the UCC or otherwise; and/or
(g) exercise any and all other rights it may have hereunder or
under the Second Modification, Credit Agreement, the Note or other Loan
Documents, or under the UCC or other applicable law.
5.2 NOTIFICATION OF SALE. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the Collateral is
to be made, shall be sent to Assignors and to any other Person entitled under
the UCC to notice; provided that if any of the Collateral threatens to decline
speedily in value or is of the type customarily sold on a recognized market,
Lender may sell or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind. It is agreed that notice sent or
given not less than five (5) calendar days prior to taking of the action to
which the notice relates is reasonable notification and notice for the purposes
hereof.
5.3 WITH RESPECT TO COLLATERAL. Upon the occurrence of an Event of
Default, Lender is authorized and empowered (without the necessity of any
further consent or authorization from Assignors), at Borrower's cost and
expense, to exercise, without notice, all or any of the following powers at any
time with respect to all or any part or items of the Collateral:
(a) receive, endorse, collect by legal proceedings or
otherwise, and demand payment directly from the makers, issuers and/or obligors
of the Collateral and receipt for all sums
Page 14
and amounts now or hereafter payable on or with respect to the Collateral;
provided that all such sums so paid to and received by Lender shall be applied
to the Obligations as provided herein;
(b) from time to time extend the time of payment, arrange for
payment in installments or otherwise modify the terms of or enter into any other
agreement in any wise relating to or affecting the Collateral, and in connection
therewith may deposit or surrender control of any security held therefor, accept
other property in exchange for any security held therefor and take such action
as if may deem proper, and any money or property received in exchange for any
security held therefor shall be applied to the Obligations, or thereafter held
by Lender pursuant to the provisions hereof;
(c) make any compromise or settlement Lender deems desirable
with respect to the Collateral;
(d) insure, process and preserve the Collateral;
(e) demand, ▇▇▇ for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for Collateral;
(f) transfer to or register in the name of Lender or any
nominee of Lender any of the Collateral and whether or not so transferred or
registered and to exchange any of the Collateral for other property upon
reorganization, recapitalization or other readjustment of the issuer, or obligor
thereof and in connection therewith to deposit any of the Collateral with any
committee or depository or other third party upon such terms as Lender may
determine; all without notice and without liability except to account for
property actually received by Lender; provided, however, that Lender shall not
be under any obligation or duty to exercise any of the powers hereby conferred
upon it and shall be without liability for any act or failure to act in
connection with the collection of, or the preservation of any rights under, any
Collateral.
5.4 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Lender from any disposition of the Collateral, or any part thereof, pursuant to
its rights under this ARTICLE 5, may be applied to the Obligations in the order
and manner determined by Lender in its sole discretion, notwithstanding any
directions or instructions to the contrary by any Assignor.
5.5 DEFICIENCY. Borrower, and Assignor as Guarantors, shall remain
jointly and severally liable to Lender for any unpaid indebtedness outstanding
under the Obligations, plus any reasonable advances, costs, charges and expenses
incurred by Lender in connection therewith, together with interest thereon and
shall pay the same immediately to Lender at Lender's place of business.
5.6 REMEDIES CUMULATIVE. All rights, titles, interest, liens and
remedies of Lender hereunder are cumulative of each other and of every other
right, title, interest, lien or remedy which Lender may otherwise have at law or
in equity or under the Second Modification, Credit Agreement, the Note or any
other contract or other writing for the enforcement of the Security Interest
herein or the collection of the Obligations, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies. Should any
Page 15
Assignor have heretofore executed or hereafter execute any other security
agreement in favor of Lender, or any of them, the security interest therein
created and all other rights, powers and privileges vested in Lender by the
terms thereof shall exist concurrently with the security interest created
herein.
5.7 INDEMNITY AND EXPENSES. (a) Borrower and each other Assignor agrees
to indemnify Lender, from and against any and all claims, damages, losses,
liabilities, costs and expenses of any kind (including reasonable attorneys'
fees) arising out of or resulting from this Security Agreement or the security
interest granted herein, or any of the Collateral (including, without
limitation, enforcement of this Security Agreement), EXPRESSLY INCLUDING SUCH
CLAIMS, LOSSES OR LIABILITIES ARISING OUT OF THE MERE NEGLIGENCE OF LENDER
(WHETHER SOLE, COMPARATIVE, CONTRIBUTORY, OR OTHERWISE)OR ANY ACT FROM WHICH
STRICT LIABILITY MAY ARISE, except claims, losses or liabilities resulting from
the gross negligence or willful misconduct of Lender.
(b) Assignors will upon demand pay to Lender the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which Lender, or, as to the matters
described in clauses (iii) or (iv) below, the Lender may incur in connection
with (i) the administration of this Security Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Lender hereunder or (iv) the failure by any Assignor to
perform or observe any of the provisions hereof. Any such amounts so made shall
be a part of the Obligations, shall be payable upon demand, and if not paid upon
demand shall bear interest at the Default Rate.
ARTICLE 6
GENERAL
6.1 USURY SAVINGS CLAUSE. No provision herein or in the Note, or in any
other document evidencing or pertaining to the Obligations shall require the
payment or permit the collection of interest in excess of the maximum permitted
by law. If any excess of interest in such respect is provided for herein or in
any such promissory note, instrument or any other loan document, the provisions
of this paragraph shall govern, and Assignors shall not be obligated to pay the
amount of such interest to the extent that it is in excess of the amount
permitted by law. The intention of the parties being to conform strictly to the
applicable usury laws now in force, all promissory notes, instruments and other
loan documents evidencing the Obligations shall be held subject to reduction to
the amount allowed under said usury laws as now or hereafter construed by the
courts having jurisdiction.
6.2 NOTICES. Whenever this Security Agreement requires or permits any
consent, approval, notice, request or demand from one party to another, the
consent, approval, notice, request, or demand shall be given, and shall be
deemed delivered, in the manner set forth in the Credit Agreement.
Page 16
6.3 FINANCING STATEMENTS. Lender shall have the right at any time to
execute and file this Security Agreement (or a photocopy hereof) as a financing
statement or to require each Assignor to execute and deliver one or more
separate financing statements or financing statement amendments which may be
filed in the appropriate state and/or county filing records, but the failure of
Lender to do so shall not impair the validity or enforceability of this Security
Agreement.
6.4 MODIFICATIONS; AMENDMENTS; SCHEDULES; ETC. No amendment or waiver
of any provision of this Security Agreement, and no consent to any departure by
any Assignor herefrom, shall in any event be effective unless the same shall be
in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Upon any change in any information disclosed herein or on any Schedule
hereto, Borrower shall promptly prepare and deliver to Lender a replacement
schedule, indicating its effective date, in form and substance satisfactory to
Lender, and amendments to and additional financing statements as Lender may
require to preserve and perfect a first priority security interest in the
Collateral.
6.5 CONTINUING SECURITY INTEREST. This Security Agreement shall create
a continuing security interest in the Collateral and shall remain in full force
and effect until the later of (i) the final payment in full of the Obligations
and all amounts payable under this Security Agreement and (ii) the expiration or
termination of the Credit Agreement and the termination of the obligations of
the Lender to extend credit thereunder.
6.6 SUCCESSORS AND ASSIGNS. This Security Agreement shall be binding
upon and inure to the benefit of Assignors and Lender and their respective
heirs, devisees, legal and personal representatives, successors, and assigns;
provided that Assignors may not, without the prior written consent of Lender,
assign any rights, powers, duties, or obligations hereunder.
6.7 NO WAIVER; SEVERABILITY. Lender shall not by any act delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder to have acquiesced in any Event of Default of in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of any of Lender any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by any
of Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Lender would otherwise have on
any future occasion. This Security Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable Legal
Requirements. If any provision of this Security Agreement or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, then neither the remainder of the instrument in
which such provision is contained nor the application of such provision to other
persons or circumstances nor the other instrument referred to hereinabove shall
be affected thereby, but rather, shall be enforced to the greatest extent
permitted by law.
6.8 GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
Page 17
STATE OF NEW MEXICO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW MEXICO. UNLESS OTHERWISE DEFINED HEREIN OR IN THE NOTES OR THE CREDIT
AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UCC ARE USED HEREIN AS THEREIN DEFINED
THE PARTIES IRREVOCABLY AGREE THAT IN THE EVENT OF ANY DISPUTE ARISING HEREUNDER
OR IN CONNECTION WITH THE NOTES, VENUE FOR SUCH DISPUTE SHALL BE IN ANY COURT OF
COMPETENT JURISDICTION IN BERNALILLO COUNTY, NEW MEXICO.
6.9 SURVIVAL OF OBLIGATIONS. The Obligations shall survive the
execution and delivery of this Security Agreement, and shall continue in full
force and effect until the Obligations shall have been paid and performed in
full.
6.10 NO THIRD PARTY BENEFICIARY. This Security Agreement is for the
benefit only of Lender and Assignors and is not for the benefit of any third
party.
6.11 JURY TRIAL WAIVER. LENDER AND EACH ASSIGNOR HEREBY WAIVE ANY RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OR RELATING TO THIS SECURITY
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
6.12 OBLIGATIONS NOT AFFECTED. To the fullest extent permitted by
applicable law, the obligations of each Assignor under this Security Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(a) any amendment or modification or addition or supplement to
any Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by Lender of any
right, remedy, power or privilege under or in respect of, or any release of any
guaranty, any collateral or the Collateral or any part thereof provided pursuant
to, this Security Agreement or any other Loan Document;
(c) any waiver, consent, extension, indulgence or other action
or inaction in respect of this Security Agreement or any other Loan Document or
any assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Assignor, or any other
Person, whether or not such Assignor shall have notice or knowledge of any of
the foregoing.
6.13 LOAN DOCUMENT; CONFLICTS WITH CREDIT AGREEMENT AND OTHER LOAN
DOCUMENTS. This Security Agreement is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance
Page 18
with the terms and provisions thereof. In the event of any conflict or
inconsistency between the terms of this Security Agreement and the terms of the
Credit Agreement, the terms of the Credit Agreement will control.
6.14 AGREEMENT TO SUPPLEMENT. Assignors acknowledge and agree that this
Security Agreement shall be amended and supplemented from time to time to add
additional Assignors and/or include a description of additional Collateral
subject hereto subsequent to the date hereof, as and when any new Subsidiary of
Borrower is to be added as a Guarantor under the Credit Agreement, it being
understood and agreed that each Subsidiary of Borrower organized in the United
States shall be a Guarantor and a Subsidiary Assignor. Lender shall be entitled
to supplement SCHEDULE A and any other applicable Schedules from time to time,
without any action or joinder of Assignors to reflect the addition of all such
additional Assignors and/or Collateral. Except as permitted by the Credit
Agreement, Lender shall have a valid first priority security interest in all
additional Collateral that comes into existence after the date hereof, whether
or not reflected on a supplement hereto. Assignors hereby agree to execute,
deliver and cause the filing of all notices, financing statements and other
documents and to take such further action as deemed necessary in Lender's
discretion with respect to each such additional Collateral to ensure the rights
of Lender hereunder with respect thereto.
6.15 COUNTERPARTS. This Security Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
6.16 NOTICE OF FINAL AGREEMENT. THIS WRITTEN SECURITY AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. PURSUANT TO 58-6-5 ▇▇▇▇ ▇▇▇▇ (REPL. PAMPHLET) A CONTRACT, PROMISE OR
COMMITMENT TO LOAN MONEY OR TO GRANT, EXTEND OR RENEW CREDIT OR ANY MODIFICATION
THEREOF, IN AN AMOUNT GREATER THAN TWENTY-FIVE THOUSAND AND NO/100 DOLLARS
($25,000.00) NOT PRIMARILY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES MADE BY A
FINANCIAL INSTITUTION IS NOT ENFORCEABLE UNLESS IN WRITING AND SIGNED BY THE
PARTIES TO BE CHARGED OR THAT PARTY'S AUTHORIZED REPRESENTATIVES.
Page 19
EXECUTED as of the date first above written.
BORROWER:
SBS TECHNOLOGIES, INC.,
a New Mexico corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Vice President, Finance and Administration
LENDER:
BANK OF AMERICA, N.A., formerly NationsBank, N.A.,
a national banking association
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Title: Senior Vice President
--------------------------
SUBSIDIARY ASSIGNORS:
SBS TECHNOLOGIES, INC. CONNECTIVITY
PRODUCTS, f/k/a SBS Bit 3 Operations, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Treasurer
--------------------------
SBS TECHNOLOGIES, INC. TELEMETRY AND
COMMUNICATIONS PRODUCTS, f/k/a SBS ▇▇▇▇
Telemetry Systems, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Treasurer
--------------------------
Page 20
SBS TECHNOLOGIES INC. MODULAR I/O, f/k/a SBS
Greenspring Modular I/O, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Secretary
--------------------------
SBS TECHNOLOGIES, INC. EMBEDDED COMPUTERS,
f/k/a SBS Embedded Computers, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Treasurer
--------------------------
SBS TECHNOLOGIES INC. INDUSTRIAL COMPUTERS,
f/k/a SBS Micro Alliance, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Treasurer
--------------------------
SBS TECHNOLOGIES INC. COMMUNICATIONS
PRODUCTS, f/k/a VI Computer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------
Title: Treasurer
--------------------------
Page 21
SCHEDULE A
List of Subsidiary Assignors
SBS TECHNOLOGIES, INC. CONNECTIVITY PRODUCTS, f/k/a SBS Bit 3 Operations, Inc.
SBS TECHNOLOGIES, INC. TELEMETRY AND COMMUNICATIONS PRODUCTS, f/k/a SBS
▇▇▇▇ Telemetry Systems, Inc.
SBS TECHNOLOGIES INC. MODULAR I/O, f/k/a SBS Greenspring Modular I/O, Inc.
SBS TECHNOLOGIES, INC. EMBEDDED COMPUTERS, f/k/a SBS Embedded Computers, Inc.
SBS TECHNOLOGIES INC. INDUSTRIAL COMPUTERS, f/k/a SBS Micro Alliance, Inc.
SBS TECHNOLOGIES INC. COMMUNICATIONS PRODUCTS, f/k/a VI Computer
SDL COMMUNICATIONS, INC. [UPON ACQUISITION]
Page 22
SCHEDULE B
Principal Place of Business
and
Location of Inventory, Equipment and Furniture
[LOGO]
SBS Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
AFC ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SBS Technologies, Inc. Telemetry and Communications
Products
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SBS Technologies Inc. Industrial Computers
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SBS Technologies Inc. Communications Products
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SBS Technologies Inc. Modular I/O
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SBS Technologies, Inc. Embedded Computers
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SBS Technologies, Inc. Connectivity Products
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Page 23
SCHEDULE C
Trade Names
NAME TRADE NAME(S)
---- -------------
SBS Technologies, Inc. None
SBS Technologies, Inc. Telemetry and Communications SBS ▇▇▇▇ Telemetry Systems, Inc.
Products
SBS Technologies Inc. Industrial Computers SBS Micro Alliance, Inc.
SBS Technologies Inc. Communications Products VI Computer
SBS Technologies Inc. Modular I/O SBS Greenspring Modular I/O, Inc.
SBS Technologies, Inc. Embedded Computers SBS Embedded Computers, Inc.
SBS Technologies, Inc. Connectivity Products SBS Bit 3 Operations, Inc.
Page 24