[IMPERIAL BANK LOGO]
IMPERIAL BANK
Member FDIC
GENERAL SECURITY AGREEMENT
(Tangible and Intangible Personal Property)
This Agreement is executed on July 9, 1997 , by
USFG/DHRG L.P. NO. 2, INC.
(hereinafter called "Obligor").
In consideration of financial accommodations given, to be given or continued,
the Obligor grants to IMPERIAL BANK (hereinafter called "Bank") a security
interest in (a) all property (i) delivered to Bank by Obligor, (ii) which shall
be in Bank's possession or control in any matter or for any purpose, (iii)
described below, (iv) now owned or hereafter acquired by Obligor of the type or
class described below and/or in any supplementary schedule hereto, or in any
financing statement filed by Bank and executed by or on behalf of Obligor; (b)
the proceeds, increase and products of such property, all accessions thereto,
and all property which Obligor may receive on account of such collateral which
Obligor will immediately deliver to Bank (collectively referred to as
"Collateral") to secure payment and performance of all of Obligor's present or
future debts or obligations to Bank, whether absolute or contingent (hereafter
referred to as "Debt"). Unless otherwise defined, words used herein have the
meanings given them in the California Uniform Commercial Code.
Collateral:
A. VEHICLE, VESSEL, AIRCRAFT:
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Identification License or
Year Make/Manufacturer Model and Serial No. Registration No. New or Used
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N/A
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Engine or other equipment:
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(For aircraft - original ink signature on copy to FAA)
B. DEPOSIT ACCOUNTS:
Type Account Number Amount $
-------------------- ------------------ ----------
In name of Depository
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AND ALL EXTENSIONS OR RENEWALS THEREOF.
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SECURITY AGREEMENT CONTINUED
C. ACCOUNTS, INTANGIBLES AND OTHER: (Describe)
All personal property, whether presently existing or hereafter
created or acquired, including but not limited to: All accounts,
chattel paper, documents, instruments, money, deposit accounts and
general intangibles including returns, repossessions, books and
records relating thereto, and equipment containing said books and
records. All goods including equipment and inventory. All proceeds
including, without limitation, insurance proceeds. All guarantees
and other security therefor. All investment property including
securities and securities entitlements.
The collateral not in Bank's possession will be located at: 00000 X. Xxxxxxx
Xxxxxxxxxx #000, Xxxxxx, XX 00000
[ ] If checked, the Obligor is executing this Agreement as an Accommodation
Debtor only and the Obligor's liability is limited to the security interest
granted in the Collateral described herein. The party being accommodated is
("Borrower").
All the terms and provisions on the reverse side hereof are incorporated herein
as though set forth in full, and constitute a part of this Agreement.
Signature
(indicate title,
Name if applicable) Address
USFG/DHRG L.P. NO. 2, INC. BY: 00000 X. Xxxxxxx Xxxxx. #000
-------------------------- ---------------------- ----------------------------
J. Xxxxxxx Xxxxx Xxxxxx, Xxxxx 00000
CEO/President
-------------------------- ---------------------- ----------------------------
-------------------------- ---------------------- ----------------------------
CORPDAL:92109.1 28722-00003
SECURITY AGREEMENT CONTINUED
Obligor represents, warrants and agrees:
Obligor represents, warrants and agrees:
1. Obligor will immediately pay (a) any Debt when due, (b) Bank's costs
of collecting the Debt, of protecting, insuring or realizing on
Collateral, and any expenditure of Bank pursuant hereto, including
attorney's fees and expenses, with interest at the rate of 24% per
year, or the rate applicable to the Debt, whichever is less, from the
date of expenditure, and (c) any deficiency after realization of
Collateral.
2. Obligor will use the proceeds of any loan that becomes Debt hereunder
for the purpose indicated on the application therefore, and will
promptly contract to purchase and pay the purchase price of any
property which becomes Collateral hereunder from the proceeds of any
loan made for that purpose.
3. As to all Collateral in Obligor's possession (unless specifically
otherwise agreed by Bank in writing), Obligor will:
(a) Have, or has, possession of the Collateral at the location
disclosed to Bank and will not remove the Collateral from the
location.
(b) Keep the Collateral separate and identifiable.
(c) Maintain the Collateral in good and saleable condition, repair it
if necessary, clean, feed, shelter, water, medicate, fertilize,
cultivate, irrigate, prune and otherwise deal with the Collateral
in all such ways as are considered good practice by owners of
like property, use it lawfully and only as permitted by insurance
policies, and permit Bank to inspect the Collateral at any
reasonable time.
(d) Not sell, lease, encumber or transfer the Collateral (other than
Inventory Collateral) until the Debt has been paid, even though
Bank has a security interest in proceeds of such Collateral.
4. As to Collateral which is Inventory and accounts, Obligor:
(a) May, until notice from Bank, sell, lease or otherwise dispose of
Inventory Collateral in the ordinary course of business only, and
collect the cash proceeds thereof.
(b) Will, upon notice from Bank, deposit all cash proceeds as
received in a demand deposit account with Bank containing only
such proceeds and deliver statements identifying units of
inventory disposed of, accounts which gave rise to proceeds, and
all acquisitions and returns of Inventory, as required by Bank.
(c) Will receive in trust, schedule on forms satisfactory to the Bank
and deliver to Bank all noncash proceeds other than Inventory
received in trade.
(d) If not in default, may obtain release of Bank's interest in
individual units of inventory upon request, therefore, payment to
Bank of the release price of such units shown on any Collateral
schedule supplementary hereto, and compliance herewith as to
proceeds thereof.
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SECURITY AGREEMENT CONTINUED
5. As to Collateral which is accounts, chattel paper, general intangibles
and proceeds described in 4(c) above, Obligor warrants, represents and
agrees:
(a) All such Collateral is genuine, enforceable in accordance with
its terms, free from default, prepayment, defense and conditions
precedent (except as disclosed to and accepted by Bank in
writing) and is supported by consecutively numbered invoices to,
or rights against, the debtors thereon. Obligor will supply Bank
with duplicate invoices or other evidence of Obligor's rights on
Bank's request;
(b) All persons appearing to be obligated on such Collateral have
authority and capacity to contract;
(c) All chattel paper is in compliance with law as to form, content
and manner of preparation and execution and has been properly
registered, recorded, and/or filed to protect Obligor's interest
thereunder;
(d) If an account debtor shall also be indebted to Obligor on another
obligation, any payment made by him not specifically designated
to be applied on any particular obligation shall be considered to
be a payment on the account in which Bank has a security
interest. Should any remittance include a payment not on an
account, it shall be delivered to Bank and if no event of default
has occurred, Bank shall pay Obligor the amount of such payment;
(e) Obligor agrees not to compromise, settle or adjust any account or
renew or extend the time of payment thereof without Bank's prior
written consent.
6. Obligor owns all Collateral absolutely and no other person has or
claims any interest in any Collateral, except as disclosed to and
accepted by Bank in writing. Obligor will defend any proceeding which
may affect title to or Bank's security interest in any Collateral, and
will indemnify and hold Bank free and harmless from all costs and
expenses of Bank's defense.
7. Obligor will pay when due all existing or future charges, liens or
encumbrances on and all taxes and assessments now or hereafter imposed
on or affecting the Collateral and, if the Collateral is in Obligor's
possession, the realty on which the Collateral is located.
8. Obligor will insure the Collateral with Bank as loss payee, in form
and amounts, with companies, and against risks and liability
satisfactory to Bank, and hereby assigns such policies to Bank, agrees
to deliver them to Bank at Bank's request, and authorizes Bank to make
any claim thereunder, to cancel the insurance on Obligor's default,
and to receive payment of and endorse any instrument in payment of any
loss or return premium. If Obligor should fail to deliver the required
policy or policies to the Bank, Bank may, at Obligor's cost and
expense, without any duty to do so, get and pay for insurance naming
as the insured, at Bank's option, either both Obligor and the Bank, or
only the Bank, and the cost thereof shall be secured by this security
agreement, and shall be repayable as provided in Paragraph 1 above.
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SECURITY AGREEMENT CONTINUED
9. Obligor will give Bank any information it requires. All information at
any time supplied to Bank by Obligor (including, but not limited to,
the value and condition of Collateral, financial statements, financing
statements, and statements made in documentary Collateral), is correct
and complete, and Obligor will notify Bank of any adverse change in
such information. Obligor will promptly notify Bank of any change of
Obligor's residence, chief executive office or mailing address.
10. Bank is irrevocably appointed Obligor's attorney-in-fact to do any act
which Obligor is obligated hereby to do, to exercise such rights as
Obligor may exercise, to use such equipment as Obligor might use, to
enter Obligor's premises to give notice of Bank's security interest
in, and to collect Collateral and proceeds and to execute and file in
Obligor's name any financing statements and amendments thereto
required to perfect Bank's security interest hereunder, all to protect
and preserve the Collateral and Bank's rights hereunder, Bank may:
(a) Endorse, collect and receive delivery or payment of instruments
and documents constituting Collateral;
(b) Make extension agreements with respect to or affecting
Collateral, exchange it for other Collateral, release persons
liable thereon or take security for the payment thereof, and
compromise disputes in connection therewith;
(c) Use or operate Collateral for the purpose of preserving
Collateral or its value and for preserving or liquidating
Collateral.
11. If more than one Obligor signs this agreement, their liability is
joint and several. Any Obligor who is married, agrees that recourse
may be had against separate property for The Debt. Discharge of any
Obligor except for full payment, or any extension, forbearance, change
of rate of interest, or acceptance, release or substitution of
Collateral or any impairment or suspension of Bank's rights against an
Obligor, or any transfer of an Obligor's interest to another shall not
affect the liability of any other Obligor. Until the Debt shall have
been paid or performed in full, Bank's rights shall continue even if
the Debt is outlawed. All Obligors waive:
(a) any right to require Bank to proceed against any Obligor before
any other, or to pursue any other remedy;
(b) presentment, protect and notice of protest, demand and notice of
nonpayment, demand or performance, notice of sale, and
advertisement of sale;
(c) any right to the benefit of or to direct the application of any
Collateral until the Debt shall have been paid;
(d) and any right of subrogation to Bank until Debt shall have been
paid as performed in full.
12. Upon default, at Bank's option with notice, all or any part of the
Debt shall immediately become due. Bank shall have all rights given by
law, and may *12 sell, in one or more sales. Collateral in any county
where Bank has an office, Bank may purchase at such sale. Sales for
cash or on credit to a wholesaler, retailer or user of the Collateral
or at public or private auction, are all to be considered commercially
reasonable. Bank may require Obligor to assemble the Collateral and
make it available to Bank at the entrance to the location of the
Collateral, or a place designated by Bank. Defaults shall include:
(a) Obligor's failure to pay or perform this or any agreement with
Bank or breach of any warranty herein, or Borrower's failure to
pay or perform any agreement with Bank.
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SECURITY AGREEMENT CONTINUED
(b) Any change in Obligor's or Borrower's financial condition which
in Bank's judgment impairs the prospect of Borrower's payment or
performance.
(c) Any actual or reasonably anticipated deterioration of the
Collateral or in the market price thereof which causes it in
Bank's judgment to become unsatisfactory as security.
(d) Any levy or seizure against Borrower or any of the Collateral.
(e) Death, termination of business, assignment for creditors,
insolvency, appointment of receiver, or the filing of any
petition under bankruptcy or debtor's relief laws of, by or
against Obligor or Borrower or any guarantor of the Debt.
(f) Any warranty or representation is false or is believed in good
faith by Bank to be false.
13. Bank's acceptance of partial or delinquent payments or the failure of
Bank to exercise any right or remedy shall not waive any obligation of
Obligor or Borrower or right of Bank or modify this agreement, or
waive any other similar default.
14. On transfer of all or any part of the Debt, Bank may transfer all or
any part of the Collateral. Bank may deliver all or any part of the
Collateral to any Obligor at any time. Any such transfer or delivery
shall discharge Bank from all liability and responsibility with
respect to such Collateral transferred or delivered. This agreement
benefits Banks's successors and assigns and binds Obligor's heirs,
legatees, personal representatives, successors and assigns. Obligor
agrees not to assert against any assignee of Bank any claim or defense
that may exist against Bank. Time is of the essence. This agreement
and supplementary schedules herein contain the entire security
agreement between Bank and Obligor. Obligor will execute any
additional agreements, assignments or documents reasonably required by
Bank to carry this agreement into effect.
15. This agreement shall be governed by and construed in accordance with
the laws of the State of California, to the jurisdiction of whose
courts the Obligor hereby agrees to submit. Obligor agrees that
service of process may be accomplished by any means authorized by
California law. All words used herein in the singular shall be
considered to have been used in the plural where the context and
construction so require.
CORPDAL:92109.1 28722-00003
ADDENDUM TO General Security Agreement
Dated July 9, 1997
USFG/DHRG L.P. NO. 2, INC.
12. "Provided, however, it shall not be an event of default hereunder for
Obligor's failure to perform any monetary or non-monetary covenant
until thereafter that Bank has provided Obligor with written notice
and thirty (30) days thereafter in which to in good faith cure such
default.
USFG/DHRG L.P. NO. 2, INC.
BY: /s/ J. Xxxxxxx Xxxxx
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J. Xxxxxxx Xxxxx, CEO/President
CORPDAL:92109.1 28722-00003
