Exhibit 10.25
COLLATERAL AGENCY AND SECURITY AGREEMENT
THIS COLLATERAL AGENCY AND SECURITY AGREEMENT, dated as of April 6, 2005
(this “Agreement”), among ELCOM INTERNATIONAL, INC., a Delaware corporation (the
"Company"), Xxxxxxx X. Xxxxx, as Collateral Agent (“Collateral Agent”) and the
holders of the Notes (as defined below) which are signatories hereto (the “Secured
Parties”);
WITNESSETH:
WHEREAS, on even date herewith, the Company shall issue 12% Secured
Promissory Notes (the “Notes”) in connection with a 2005 financing (the
“Financing”) and pursuant to an agreement between the Company
and each Secured Party as evidenced by the Notes and this Agreement;
WHEREAS, the Secured Parties have conditioned their lending of funds
pursuant to the Notes upon the Company's granting a security interest in favor of the Secured
Parties on the terms contemplated hereby;
WHEREAS, the Secured Parties desire to appoint a collateral agent
for the purposes of facilitating the perfection and enforcement of the security interests
created hereby and by the Notes;
In consideration of the mutual promises hereof, and other good and
valuable consideration the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Notes. As used in this
Agreement, the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and the plural forms of the terms defined).
“Agreement” means this Agreement (including without limitation
each amendment, if any) unless the context otherwise clearly requires.
“Collateral” means all of the personal property and intellectual
property of the Company, wherever located, and now owned or hereafter acquired, including
without limitation: Accounts, Chattel Paper, Inventory, Equipment, Instruments, Investment
Property, Documents, Deposit Accounts, Letter-of-Credit Rights, General Intangibles
(including Payment Intangibles), Supporting Obligations; and to the extent not listed above
as original collateral, Proceeds and Products of the foregoing (each capitalized term
used herein which is defined in Article 8 or Revised Article 9 of the UCC has the meaning
ascribed to such term by the UCC).
“Event of Default” means the occurrence of any event which
constitutes an Event of Default under the Notes.
“Lien” means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement, including,
without limitation, the lien or retained security title of a conditional vendor and an
easement, right of way or other encumbrance on title to real property.
“Notes” means the 12% Secured Promissory Notes of even date
herewith issued by the Company to the Secured Parties.
“Obligations” shall mean all financial and other obligations
of the Company to the holders of the Notes pursuant to the Notes and all Related Expenses.
“Permitted Liens” means (a) Liens for taxes not yet due or
which are being actively contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with generally accepted accounting
principles, (b) other statutory Liens incidental to the conduct of the Company’s
business or the ownership of the Collateral or other assets which do not in the aggregate
materially detract from the value of the Collateral or materially impair the use thereof
in the operation of the Company's business, (c) any Lien created hereunder, (d) purchase
money Liens on fixed assets provided that such Lien only attaches to the property being
acquired and secures only that amount necessary for the acquisition of such property,
and (e) Liens created pursuant to the Company's 2003 issuance of 10% Convertible Senior
Debentures (the "Debentures") which are and have been wholly subordinated and junior to
all rights created by and under the Notes and this Agreement, as and to the extent provided
in the Debentures.
“Ratable Portion” means, with respect to any Secured Party,
the quotient (expressed as a percentage) obtained at any time by dividing (x) the principal
amount of such Secured Party‘s Note(s) by (y) the sum of the aggregate amount of all
outstanding Notes.
“Related Expenses” means any and all costs, liabilities,
and expenses (including without limitation, losses, damages, penalties, claims,
actions, reasonable attorney's fees and legal expenses, judgments, suits, and
disbursements) incurred by, imposed upon, or asserted against, the Collateral Agent or any
Secured Party in connection with any attempt by the Collateral Agent or any Secured
Party: (a) to preserve, perfect, or enforce any security interest evidenced by this
Agreement, (b) to obtain payment, performance, and observance of any and all of the
Obligations to the extent specified herein or in the Notes, (c) to maintain, insure,
collect, preserve, repossess, and dispose of any of the Collateral, or (d) incidental
or related to (a) through (c) above including, without limitation, interest thereupon
from the date incurred, imposed, or asserted until paid at the rate payable with respect
to the Notes, but in no event greater than the highest rate permitted by law.
“Required Secured Parties” means Secured Parties holding at
least fifty-one percent (51%) of the aggregate amount of the Obligations outstanding under
the Notes at the time of determination.
“UCC” means the Uniform Commercial Code as in effect from time
to time in the Commonwealth of Massachusetts.
2. Security. The Company grants a first priority senior
security interest in the Collateral to the Collateral Agent, for the benefit of the
Holders, to secure the payment or performance of the Obligations.
3. Representations and Warranties: In addition to the representations
and warranties set forth in the Notes, the Company represents and warrants to Collateral Agent
and the Secured Parties as follows:
3.01 Company’s chief executive office is located at 00 Xxxxxx Xxx,
Xxxxxxx, Xxxxxxxxxxxxx 00000. All of Company’s records relating to Accounts are located
at its aforesaid chief executive office.
3.02 Except in the case of Inventory being shipped to or from
Company in the ordinary course of business, all Collateral consisting of Goods is
located at those locations set forth on Schedule A attached hereto. Except as set forth
on Schedule A hereto, such premises are owned by the Company.
3.03 The Company’s state of incorporation is the State of
Delaware, and the Company's exact legal name is as set forth in the first paragraph of
this Agreement.
3.04 The Company has rights in or the power to transfer the Collateral,
and its title to the Collateral is free of all adverse Liens (other than Permitted Liens) and
restrictions on transfer or pledge, except as created by this Security Agreement and except as
permitted by the Notes.
3.05 Pursuant to Section E.2. of the Debentures, (a) prior to
April 23, 2005, the Company may incur indebtedness, including but not limited to such
indebtedness as contemplated by the Notes and herein, up to an aggregate principal
amount of $1,500,000 with the approval of the holders (or their Permitted
Transferees, as defined in the Debentures) of 51% of the aggregate principal amount
of all of the Debentures issued in the Offering (as defined in the Debentures) and
(b) after April 23, 2005, the Company may incur indebtedness, including but not
limited to such indebtedness as contemplated by the Notes and herein, (i) the aggregate
principal amount of which does not exceed $1,500,000, without any action or approval on
the part of the holders of the Debentures, and (ii) the aggregate principal amount of
which exceeds $1,500,000, upon the approval of the Majority-in-Interest (as defined
in the Debentures) (any of the preceding, “Permitted New Indebtedness”).
Any and all Debentures shall be subordinated in right of payment and action to
the payment in full of such Permitted New Indebtedness, as and to the extent provided
in the Debentures.
4. Perfection; Possession; Control. The Company authorizes
the Collateral Agent to file one or more financing statements (the “Financing
Statements”) describing the Collateral. The Company shall have possession of the
Collateral, except where expressly otherwise provided in this Security Agreement or where
the Collateral Agent chooses to perfect its security interest by possession in
addition to the filing of the Financing Statements. Where Collateral is in the
possession of a third party, the Company will, upon the Collateral Agent’s request,
join with the Collateral Agent in notifying the third party of the Collateral Agent’s
security interest and obtaining an acknowledgment from the third party that such
third party is holding the Collateral for the benefit of the Collateral Agent.
The Company will cooperate with the Collateral Agent in obtaining control with
respect to the Collateral consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights and Electronic Chattel Paper.
5. Further Assurances. The Company will make and do all such
acts and things as the Collateral Agent may from time to time reasonably require for
the better evidencing, validation, perfection or other protection of its security
interest or to enable it to enforce its rights and remedies hereunder with respect to
any Collateral, all at Company’s expense.
6. Collateral Agent May Perform. Unless otherwise provided
herein, if Company fails to perform any agreement contained herein, upon ten (10)
days’ prior notice, Collateral Agent may, and upon the request of the Required
Secured Parties shall, itself perform or cause performance, of such agreement, and the
expenses of Collateral Agent incurred in connection therewith shall be payable by
Company under Section 15 hereof. However, the powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by it
hereunder, Collateral Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
7. Schedules. Upon request by Collateral Agent, Company will
furnish to Collateral Agent as of the date hereof and from time to time hereafter
statements and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as Collateral Agent may reasonably
request, all in reasonable detail.
8. Change of Name; State of Incorporation; Corporate Existence.
Without the Collateral Agent’s prior written consent, the Company will not (a) change
the state of its incorporation, (b) change its corporate name without providing
Collateral Agent with thirty (30) days’ prior written notice, or (c) in one
transaction or a series of transactions, merge into or consolidate with any
other entity, or sell all or substantially all of its assets.
9. Transfer of Collateral; Liens; Locations. Without Collateral
Agent’s prior written consent, Company will not (a) sell or otherwise transfer
the Collateral or any part thereof (other than (i) Inventory in the ordinary course
of business and (ii) Equipment which shall, in the good faith judgment of the Company,
have become obsolete or no longer useful in the business of the Company) outside the ordinary
course of business, (b) permit a Lien on the Collateral except for Permitted Liens,
or (c) move or permit anyone else to move material amounts of the Collateral or any part
thereof from the location or locations specified herein in Schedule A, provided,
however, that Collateral may be moved to different locations without the Collateral Agent’s
prior written consent if (i) the Collateral Agent is notified of the new location within
ten (10) days after such moving, and (ii) the Collateral Agent's Lien on such Collateral
continues to be a perfected Lien in such new location.
10. Insurance. The Company shall, at its own expense, insure
the Collateral at all times against such risks as is customary for businesses of
the type owned by the Company and will provide the Collateral Agent with evidence
thereof as often as the Collateral Agent shall reasonably request. Each policy of
insurance shall (a) name the Collateral Agent as a loss payee as its interest shall
appear and (b) provide for not less than thirty (30) days’ prior written notice
to the Collateral Agent of the cancellation of or any material reduction in coverage
provided by such policy. If the Company fails to maintain satisfactory insurance,
the Collateral Agent as the Company’s agent may, but shall not be required to,
immediately obtain such insurance or obtain insurance covering only the Collateral Agent’s
interest; if the Collateral Agent elects to do either, the Company shall repay upon demand
all amounts the Collateral Agent so expends, and, until such repayment, such
amounts shall be part of the Obligations hereunder.
11. Remedies. Upon the occurrence and continuation of an Event
of Default, in addition to the rights and remedies provided for elsewhere in this
Agreement, and under the UCC, the Collateral Agent may, and upon the request of the
Required Secured Parties shall, exercise the following rights and remedies:
11.01 Possession of Collateral. The Collateral Agent may,
and upon the request of the Required Secured Parties shall, take immediate possession
of the Collateral and all Proceeds relating to such Collateral and: (a) exercise any
and all rights and remedies of the Company in respect of the Collateral, (b) require the
Company, at the Company's expense, to assemble the Collateral and make it available to
the Collateral Agent at the Company’s Norwood, Massachusetts-area facilities,
(c) enter any of the premises of the Company or wherever any Collateral shall be
located and to keep and store the same on such premises until sold. If the premises
on which the Collateral is located is owned or leased by the Company, then the Company
shall not charge the Collateral Agent for storage of such Collateral on such premises,
occupy any premises owned or leased by Company where the Collateral or any part thereof
is assembled for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to Company in respect of such occupation and
Collateral Agent may exclude Company, its agents, employees and servants therefrom, and
having and holding the same may use, operate, manage and conduct the business of Company
and do any acts which it deems necessary or desirable to preserve the value and marketability
of the Collateral, or any part thereof or interest therein, all without prior notice to
Company, except as specifically provided below with respect to a formal public or private
sale (including, without limitation, the right to fill and ship in accordance with then
existing purchase orders, the right to solicit orders; and to do all such things and acts
as Collateral Agent deems reasonably necessary or desirable in order to maximize the value
of the Collateral) and upon every such entry, Collateral Agent, at the expense of Company,
shall have the right to manage and operate and carry on the business thereof and exercise all
rights and powers of Company with respect thereto in the name of Company or otherwise as
is reasonably deemed appropriate, after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, replacements, alterations, additions, betterments
and improvements and amounts necessary to pay for taxes, assessments, insurance and prior
insurance or other proper charges upon the Collateral, Company's business or any part thereof,
as well as just and reasonable compensation for its services and for all attorneys, counsel,
agents, clerks, servants and other employees by it engaged and employed, shall
apply the moneys arising as aforesaid pursuant to the provisions of this Agreement
(except as required by applicable law, nothing contained herein shall be construed
to impose upon Collateral Agent any obligation to preserve or protect the Collateral or
Company's business following the occurrence of an Event of Default). Collateral Agent
may demand that Company deliver to Collateral Agent all of Company's books and records
in respect of the Collateral.
11.02 Notification of Account Debtors. Company irrevocably
authorizes and directs each account debtor to honor any demand by Collateral
Agent that all payments in the respect of the Accounts thereafter be paid directly
to Collateral Agent.
11.03 Enforcement of Accounts. Collateral Agent may, and upon
the request of the Required Secured Parties shall, enforce payment of the Accounts by
suit or otherwise, but Collateral Agent shall have no duty to institute any suit or
to take any other action to enforce the Accounts (or any security therefor) or,
having started any such suit or attempt, thereafter to continue the same. In each
case Collateral Agent may proceed with counsel of Collateral Agent's choosing
and Company agrees to reimburse Collateral Agent for Collateral Agent’s
out-of-pocket costs and expenses including, without limitation, attorney's fees, court costs
and costs of sale.
11.04 Foreclosure of Liens. The Collateral Agent may, and upon
the request of the Required Secured Parties shall, foreclose the Liens created under
this Agreement, the Notes or under any other agreement relating to the Collateral.
11.05 Disposition of Collateral. The Collateral Agent may,
and upon the request of the Required Secured Parties shall, sell or to otherwise
dispose of all or any Collateral in its then condition, or after any further manufacturing
or processing thereof, at public or private sale or sales, wholesale dispositions,
or sales pursuant to one or more contracts, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as the Collateral Agent, in its discretion,
may deem advisable in accordance with applicable laws. The Collateral Agent shall have
the right to conduct such sales on the Company's premises, without charge therefor,
and such sales may be adjourned from time to time in accordance with applicable law
without further requirement of notice to the Company. Each Secured Party shall have
the right to bid or credit bid any such sale on its own behalf.
11.06 Application of Collateral. The Collateral Agent, with or
without proceeding with sale or foreclosure or demanding payment of the Obligations,
shall have the right, without notice, at any time, to appropriate and apply to any
Obligations any and all Collateral in the possession of the Collateral Agent or the
Secured Parties.
12. The Collateral Agent.
12.01 Appointment as Collateral Agent. Each Secured Party
irrevocably appoints the Collateral Agent to act as Collateral Agent under this
Agreement and any other agreements affecting the Collateral for the benefit of suc
Secured Party, with full authority to take such actions, and to exercise such
powers, on behalf of the Secured Parties in respect of this Agreement and the other
agreements with respect to the Collateral as are herein and therein respectively
delegated to the Collateral Agent or as are reasonably incidental to those delegated
powers. The Collateral Agent in such capacity shall be deemed to be an independent
contractor of the Secured Parties. Each Secured Party hereby expressly agrees that,
unless requested by the Collateral Agent upon the concurrence of the Required Secured
Parties, none of the Secured Parties will take or cause to be taken, in respect of the
Obligations or the Collateral, any action or remedy that is independent from
the actions or remedies taken or to be taken (or the decision not to take any action
or remedy) by the Collateral Agent.
12.02 Nature of Appointment. The Collateral Agent shall have no
fiduciary relationship with any Secured Party by reason of this Agreement or any other
agreement relating to the Collateral. The Collateral Agent shall not have any duty or
responsibility whatsoever to any Secured Party except those expressly set forth
in this Agreement. Without limiting the generality of the foregoing, each Secured Party
acknowledges that the Collateral Agent is acting as such solely as a convenience to
the Secured Parties and not as a manager of the Obligations evidenced by the Notes.
This Section 12 does not confer any rights upon the Company or anyone else (except the
Secured Parties), whether as a third party beneficiary or otherwise.
12.03 Collateral Agent as a Secured Party; Other Transactions.
The Collateral Agent's rights as a Secured Party under this Agreement, if any,
shall not be affected by its serving as the Collateral Agent. The Collateral Agent
and its Affiliates may generally transact any Secured Party, financial, trust,
advisory or other business with the Company without notice to the Secured Parties,
without accounting to the Secured Parties, and without prejudice to the Collateral
Agent’s rights as a Secured Party under this Agreement, if any, except as may be
expressly required under this Agreement.
12.04 Instructions from Secured Parties. The Collateral Agent
shall not be required to exercise any discretion or take any action as to matters not
expressly provided for by this Agreement (including, without limitation, collection and
enforcement actions in respect of the Collateral or this Agreement) except that the
Collateral Agent shall take such action (or omit to take such action) as may be reasonably
requested of it in writing by the Required Secured Parties with instructions and which
actions and omissions shall be binding upon all of the Secured Parties; provided,
however, that the Collateral Agent shall not be required to act (or omit any act) if,
in its judgment, any such action or omission might expose the Collateral Agent to personal
liability or might be contrary to this Agreement or any applicable law.
12.05 Secured Party's Diligence. Each Secured Party: (a) represents
and warrants that it has made its own decision to enter into this Agreement and the Notes
and (b) agrees that it will make its own decision as to taking or not taking future
actions in respect of this Agreement and the Notes; in each case without reliance on
the Collateral Agent or any other Secured Party and on the basis of its independent credit
analysis and its independent examination of and inquiry into such documents and other
matters as it deems relevant and material. Further and without limiting the generality of the
foregoing sentence, each Secured Party represents and warrants that it is aware of and
recognizes the Company's current financial state as of the date hereof.
12.06 No Implied Representations. The Collateral Agent shall
not be liable for any representation, warranty, agreement or obligation of any
kind of any other party to this Agreement or anyone else, whether made or implied by
the Company in this Agreement, the Notes or any other agreement or documents or by a
Secured Party in any notice or other communication or by anyone else or otherwise.
12.07 Sub-Collateral Agents. The Collateral Agent may employ agents
and shall not be liable (except as to money or property received by it or its agents) for
any negligence or willful misconduct of any such agent selected by it with reasonable care.
12.08 Collateral Agent's Diligence. The Collateral Agent shall not
be required: (a) to keep itself informed as to anyone's compliance with any provision
of this Agreement, the Notes or any other agreement, (b) to make any inquiry into the
properties, financial condition or operation of the Company or any other matter relating
to this Agreement, the Notes or any other agreement, (c) to report to any Secured Party
any information that the Collateral Agent or any of its Affiliates may have or acquire in
respect of the properties, business or financial condition of the Company or any
other matter relating to this Agreement, the Notes or any other agreement or (d)
to inquire into the validity, effectiveness or genuineness of this Agreement, the
Notes or any other agreement.
12.09 Notice of Default. The Collateral Agent shall not be deemed
to have knowledge of any Event of Default unless and until it shall have received a
written notice describing it and citing the relevant provision of this Agreement or
the Note. The Collateral Agent shall give each Secured Party reasonably prompt
notice of any such written notice except, of course, to any Secured Party that
shall have given the written notice.
12.10 Collateral Agent’s Liability. Neither the Collateral
Agent nor any of its directors, officers, employees, attorneys, and other agents shall
be liable for any action or omission on their respective parts except for gross negligence
or willful misconduct. Without limitation of the generality of the foregoing,
the Collateral Agent: (a) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice or such counsel, accountants or experts which have been selected by the Collateral
Agent with reasonable care; (b) makes no warranty or representation to any Secured
Party and shall not be responsible to any Secured Party for any statements, warranties or
representations made in or in connection with this Agreement, the Notes or any agreement,
including, without limitation, the truth of the statements made in any certificate
delivered by the Company in this Agreement, the Notes, any Financing document or other agreement
related to any of the foregoing, the Collateral Agent being entitled for the purposes of
determining fulfillment of the conditions set forth therein to rely conclusively upon
any certificate signed by the Company; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the Notes or to inspect the property (including
the books and records) of the Company; (e) shall not be responsible to any Secured
Party for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, or collateral covered by any agreement, the
Notes or any other agreement or document and (f) shall incur no liability under or
in respect of this Agreement, the Notes or any other agreement or document by acting
upon any notice, consent, certificate or other instrument or writing (which may be
by telecopy) believed by it in good faith to be genuine and correct and signed or sent
by the proper party or parties.
Neither the Collateral Agent nor any of its directors, officers,
employees or sub-Collateral agents shall have any responsibility to the Company on
account of the failure of or delay in performance or breach by any Secured Party of
any of its obligations hereunder or to any Secured Party on account of the failure
of or delay in performance or breach by any other Secured Party or the Company
of any of their respective obligations hereunder, under the Notes or under any other
agreement or in connection herewith or therewith. The Secured Parties each hereby
acknowledge that the Collateral Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of this
Agreement unless it shall be requested in writing to do so by the Required Secured Parties.
12.11 Collateral Agent's Indemnity. The Secured Parties shall
indemnify the Collateral Agent, in its capacity as Collateral Agent, (to the extent the
Collateral Agent is not reimbursed by the Company) from and against: (a) any loss or liability
(other than any caused by the Collateral Agent's gross negligence or willful misconduct)
incurred by the Collateral Agent as such in respect of this Agreement (as the Collateral
Agent), (b) the fees charged to the Company (to the extent not paid by the Company) by
the Collateral Agent for performing its obligations hereunder, (c) any Related Expenses
and (d) any out-of-pocket expenses incurred in defending itself or otherwise related
to this Agreement or the Collateral (other than any caused by the Collateral
Agent’s gross negligence or willful misconduct) including, without limitation,
reasonable fees and disbursements of legal counsel of its own selection (including,
without limitation, the reasonable interdepartmental charges of its salaried attorneys)
in the defense of any claim against it or in the prosecution of its rights and remedies as
the Collateral Agent (other than the loss, liability or costs incurred by the
Collateral Agent in the defense of any claim against it by the Secured Parties arising
in connection with its actions in its capacity as Collateral Agent); provided, however,
that each Secured Party shall be liable for only its Ratable Portion of the whole loss or
liability.
12.12 Resignation or Removal of Collateral Agent. The Collateral
Agent may resign as Collateral Agent effective ten (10) business days after giving
notice thereof to the Secured Parties for any reason, and the Collateral Agent may be
removed at the unanimous election of all of the Secured Parties (other than the Secured
Party that is also the Collateral Agent) for any reason. If the Collateral Agent shall
resign or be removed as Collateral Agent under this Agreement, the Required Secured
Parties shall appoint from among the Secured Parties (other than the Secured Party that
has resigned or was removed) a successor Collateral Agent for the Secured Parties,
which successor Collateral Agent shall be reasonably acceptable to the Company. If,
however, in the case of resignation by the Collateral Agent, no successor Collateral
Agent shall have been appointed by the time such resignation becomes effective, then the
retiring Collateral Agent may, on behalf of the Secured Parties, appoint a successor
Collateral Agent from among the remaining Secured Parties. Upon appointment
(whether effected by the Required Secured Parties or the retiring Collateral Agent on
behalf of the Secured Parties), the successor Collateral Agent shall succeed to the
rights, powers and duties of the Collateral Agent, and the term “Collateral Agent”
shall mean such successor Collateral Agent, effective upon its appointment,
and the former Collateral Agent's rights, powers and duties as Collateral Agent shall
be terminated, without any other or further act or deed on the part of such former
Collateral Agent or any of the parties to this Agreement or any holder of the Notes.
After any retiring Collateral Agent's resignation or removal hereunder as Collateral
Agent, the provisions of Section 12.11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Collateral Agent under this Agreement.
13. Pro-Rata Treatment. Any and all (i) payments made by the
Company upon any of the Notes (whether as principal or interest), (ii) collections with
respect to the enforcement of the obligations of the Company hereunder and under the
Notes and the enforcement of the Liens created hereby and thereby and (iii) payments made
by the Company to the Collateral Agent pursuant hereto and pursuant to the Notes,
shall be shared with each of the Secured Parties in accordance with its Ratable
Portion. Each Secured Party that receives any payment amount in excess of its respective
Ratable Portion, agrees that it shall hold it in trust for the benefit of, and shall pay it
to, any Secured Party receiving less than its respective Ratable Portion.
14. Collateral Agent as Attorney-In-Fact. Collateral Agent is
hereby irrevocably appointed Company’s attorney-in-fact, with full authority in
the place and stead of Company and in the name of Company, upon the occurrence and
during the continuance of an Event of Default (unless otherwise specified), to take any
action and to execute any instrument which Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, to the extent permitted by
applicable law, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Agreement.
15. Indemnification; Expenses. Company agrees to indemnify
Collateral Agent and each of the Secured Parties from and against any and all claims,
losses and liabilities growing out of or resulting from its breach or violation of this
Agreement, the Notes and any other agreement or document executed in connection
therewith (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from Collateral Agent’s or any Secured
Party’s gross negligence or willful misconduct. Company will upon demand pay to
Collateral Agent the amount of any and all reasonable expenses, including all attorneys’
fees, expenses and fees of any experts and agents, which Collateral Agent or any Secured
Party may incur consistent with the terms of this Agreement and the Notes in connection
with (a) the administration of this Agreement, (b) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon, any of the
Collateral, as provided for herein, (c) the exercise or enforcement of any of the rights
of Collateral Agent under this Agreement, (d) the failure by Company to perform or
observe any of the provisions hereof or (e) any environmental or other laws relating
to Company, the Collateral, the Financing or the transactions contemplated hereby.
16. Security Interest Absolute. All rights of Collateral Agent
and the security interests hereunder, and all obligations of Company hereunder, shall
be absolute and unconditional, irrespective of (a) any lack of validity or enforceability
of the Note or any other agreement or instrument relating thereto; (b) any change in
the time, manner or place of payment of, or in any other term of, all or any of the
obligations or any other amendment or waiver of or any consent to any departure from this
Agreement or the Notes; (c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any guaranty,
for all or any of the obligations; or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company or a
third party grantor of a security interest other than the performance and payment of the
Obligations in full.
17. Notice. Any notices and other communications provided
for hereunder shall be in writing (including telecopied) and mailed by first class mail
(return receipt requested), telecopied or hand delivered, if to the Company, at its address
at 00 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chairman and Chief Executive
Officer, if to any Secured Party, at the address set forth below its name on the signature
page(s) hereof; and if to the Collateral Agent, at his address at 00 Xxxxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, or as to each party, at such
other address as shall be designated by such party in a written notice to each of the
other parties. All such notices and communications shall (a) be effective five (5)
business days after deposited, postage prepaid, in the US mails and (b) be effective on the
next business day when deposited, prepaid, with any nationally recognized overnight delivery
service.
18. No Waiver; Remedies Cumulative; Amendment. Each right, power or
privilege specified in this Agreement is in addition to, not in limitation of, any other
rights, powers and privileges Collateral Agent may otherwise have or acquire by other
contract or otherwise. No course of dealing, omission or delay by Collateral Agent in the
exercise of any right, power or privilege referred to in this Agreement shall operate as
a waiver thereof, nor shall any partial exercise thereof preclude any further exercise
thereof, as Collateral Agent may exercise each such right, power and privilege either
independently or concurrently and as often and in such order as Collateral Agent deems
expedient. The Collateral Agent, upon the request of the Required Secured Parties,
may consent to any waiver, release of collateral or consent requested by the Company
or execute any amendment to this Agreement (except that the amendment of this
Section 18 and the definitions of “Required Secured Parties” and “Ratable
Portion” shall require the consent of all of the Secured Parties).
19. Termination; Succession; Assignment. This Agreement shall
(a) terminate as described below in this Section 19, (b) benefit Collateral Agent, its
successors, assigns and any other holder who derives from Collateral Agent title to
or interest in any Obligations and (c) shall bind Company and Company’s heirs,
executors, administrators, successors and assigns. Without limiting the generality of
the foregoing, Collateral Agent may assign or otherwise transfer all or any portion of
its rights under this Agreement held by it to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to Collateral Agent herein or otherwise. Upon the payment
and performance in full of all of the Obligations and upon the termination of any
and all obligations of Collateral Agent hereunder, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to Company. Upon
any such termination, Collateral Agent will, at Company's expense, execute and deliver
to Company such documents as Company shall reasonably request to evidence such termination.
20. Section Headings. The section headings in this Agreement are
included for convenience of reference only and shall not constitute part of this Agreement
for any other purposes.
21. Illegality. If any provision in this Agreement, the Notes
or any other agreement related thereto shall for any reason be or become illegal, void or
unenforceable, that illegality, voidness or unenforceability shall not affect any other
provision.
22. Entire Agreement. This Agreement and the Notes of the
Company of even date herewith set forth the entire agreement of the parties as to the
transactions contemplated by this Agreement.
23. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement. Each Secured
Party, upon becoming a holder of a Note, shall execute a counterpart of this Agreement
in the form of an acknowledgment as set forth below and, until such fully executed
acknowledgment is delivered to the Collateral Agent and the Company, no such Secured
Party shall be entitled to the benefits of this Agreement.
24. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS UNLESS
OTHERWISE DEFINED HEREIN OR IN THE NOTE. TERMS USED IN ARTICLE 9 OF THE UCC ARE USED
HEREIN AS THEREIN DEFINED.
{Signature Page Follows}
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their officers duly authorized to execute the same on the day and year first
above written.
DEBTOR: ELCOM INTERNATIONAL, INC.
/s/ Xxxx X. Xxxxxx
---------------------------
By: Xxxx X. Xxxxxx
Title: President
SECURED PARTIES: /s/Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000
/s/Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
Address for Notices:
00 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
COLLATERAL AGENT: /s/Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, Collateral Agent
Schedule A
to
Collateral Agency and Security Agreement
Location of Chief Executive Xxxxxx
00 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
Locations of Goods Collateral
00 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
