EXHIBIT 10.5
AMENDED AND RESTATED
SECURITY AGREEMENT #1
(this "Agreement")
October 28, 2005
This Amended and Restated Security Agreement #1 ("Agreement") is executed
pursuant to the Loan Agreement dated October 28, 2005. This Agreement
secures the Amended and Restated Secured Promissory Note in the principal of
$4,200,000 executed pursuant to the Loan Agreement.
Secured Party: Debtor:
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XXXX XXXXXX BEST CIRCUIT BOARDS, INC.
(hereinafter "Secured Party") (hereinafter "Debtor")
1. For value received, Debtor hereby grants to Secured Party a security
interest in the following Collateral, as that term is hereinafter defined:
(i) Any and all inventory, capital assets, accounts, accounts
receivable, receivables, contract rights, book debts, checks,
notes, drafts, instruments, chattel paper, acceptances, choses in
action, any and all amounts due to Debtor or other forms of
obligations and receivables, whether now existing or hereafter
arising out of the business of Debtor, as well as any and all of
the cash or non-cash proceeds resulting from all of the foregoing;
(ii) Any and all equipment, furniture, furnishings, and fixtures,
including, without limitation, all accessories and appurtenances
to, renewals or replacements of or substitutions for any of the
foregoing;
(iii) Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held (collectively, the
"Copyrights");
(iv) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(v) Any and all design rights which may be available to Debtor now or
hereafter existing, created, acquired or held;
(vi) All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the
same (collectively, the "Patents");
(vii) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Debtor
connected with and symbolized by such trademarks (collectively,
the "Trademarks");
(viii) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the
right, but not the obligation, to xxx for and collect such damages
for said use or infringement of the intellectual property rights
identified above;
(ix) All licenses or other rights to use any of the Copyrights, Patents
or Trademarks, and all license fees and royalties arising from
such use to the extent permitted by such license or rights;
(x) All amendment, renewals and extensions of any of the Copyrights,
Trademarks or Patents; and
(xi) All proceeds and products of the foregoing, including, without
limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing (all of (i)
through and including (x) above are referred to collectively as
the "Assets").
The Assets are operated, used and are to be used only for business and
business purposes, other than farming operations, and are not for personal,
family, or household use.
2. The term "Collateral" as used herein means the Assets, as described or
referred to in Paragraph 1 above, now owned or hereafter acquired by Debtor,
together with the invoices, and profits received therefrom, accessions,
attachments, additions to, substitutes and replacements for, improvements of
such property, including, without limitation, the Assets described above,
whether now existing or hereafter made, including the proceeds of all such
above described property, and the insurance payable by reason of loss or
damage thereto, and all proceeds of any policy of insurance required thereon
by Secured Party, including premium refunds.
3. The Collateral is personal and/or intangible property, and is located at
Debtor's address/location - stated at the top of this Agreement, unless
otherwise specifically provided in Schedule 1 attached hereto and
incorporated by this reference. The location of such assets, however, will
not affect the validity of a lien against any such assets described in
Paragraph 1 above.
4. By its signature on this Agreement, Debtor hereby authorizes and requests
that the Register of Copyrights and the Commissioner of Patents and
Trademarks record this Agreement.
5. The security interest granted by this Agreement shall secure the payment
and performance of Debtor's Obligation; as the term is hereinafter defined,
to Secured Party. The term "Obligation", as used herein means (i) all
indebtedness of Debtor to Secured Party evidenced by that one certain
promissory note dated of even date herewith in the original principal amount
of FOUR MILLION TWO HUNDRED THOUSAND AND NO/l00ths Dollars ($4,200,000.00),
executed by Debtor, and payable to the order of Secured Party, together with
any and all renewals and extensions of the same, or any part thereof (the
"Note"); (ii) all other indebtedness and liabilities of Debtor to Secured
Party; (iii) all future advances or other value given by Secured Party to
Debtor; and (iv) any and all other debts, liabilities and duties of every
kind and character of Debtor (or of any one or more of them, if there be
more than one) to Secured Party, whether now or hereafter existing, and
regardless of whether such present or future debts, liabilities or duties
are direct or indirect, primary or secondary, joint, several, or joint and
several, fixed or contingent, including, without limitation, guaranteed
indebtedness, and regardless of whether such present or fixture debts,
liabilities or duties may, prior to their acquisition by Secured Party, be
or have been payable to, or be or have been in favor of, some other person
or have been acquired by Secured Party in a transaction with one other than
Debtor (it being contemplated that Secured Party may make such acquisitions
from others), together with any and all renewals and extensions of such
debts, liabilities and duties, or any part thereof. Any prior grant of a
security interest by Debtor to Secured Party is hereby renewed, extended and
carried forward, and shall remain in full force and effect.
6. Debtor represents and warrants that: (i) Debtor is the sole owner of the
Collateral, except for non-exclusive licenses granted by Debtor to its
customers in the ordinary course of business, and it is in Debtor's
possession at the location specified above unless specifically set forth on
Schedule 1; (ii) to Debtor's knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no unresolved claim exists that any
part of the Collateral violates the rights of any third party; (iii) during
the term of this Agreement, Debtor will not transfer or otherwise encumber
any interest in the Collateral, except for non-exclusive licenses granted by
Debtor in the ordinary course of business, payments made by Debtor to its
creditors in the ordinary course of business or as set forth in this
Agreement; (iv) Debtor shall promptly advise Secured Party of any material
change in the composition of the Collateral, including, without limitation,
any subsequent ownership right of the Debtor in or to any Trademark, Patent
or Copyright not specified in this Agreement; (v) Debtor shall (a) protect,
defend and maintain the validity and enforceability of the Trademarks,
Patents and Copyrights, (b) use its best efforts to detect infringements of
the Trademarks, Patents and Copyrights and promptly advise Secured Party in
writing to material infringements detected and (c) not allow any Trademarks,
Patents or Copyrights to be abandoned, forfeited or dedicated to the public
without the written consent of Secured Party, which shall not be
unreasonably withheld unless Debtor determines that reasonable business
practices suggest that abandonment is appropriate; (vi) Debtor shall (a)
register or cause to be registered (to the extent not already registered)
with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, any and all Copyrights, Patents,
Trademarks, within thirty (30) days of the date of this Agreement, (b)
register or cause to be registered with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, those
additional intellectual property rights developed or acquired by Debtor from
time to time in connection with any product prior to the sale or licensing
of such product to any third party (including, without limitation, revisions
or additions to the intellectual property rights relating to any Copyright,
Patent, or Trademark), and (c) from time to time, execute and file such
other instruments, and take such further actions as Secured Party may
reasonably request from time to time to perfect or continue the perfection
of Secured Party's interest in the Collateral; (vii) to its knowledge,
except for, and upon, the filing with the United States Patent and Trademark
office with respect to the Patents and Trademarks and the Register of
Copyrights with respect to the Copyrights necessary to perfect the security
interests created hereunder and the filing of a financing statement with the
appropriate governmental authority with respect to the Collateral, and
except as has been already made or obtained, no authorization, approval or
other action by, and no notice to or filing with, any governmental authority
or governmental regulatory body is required either (a) for the grant by
Debtor of the security interest granted herein or for the execution,
delivery or performance of this Agreement by Debtor or (b) for the
perfection in or the exercise by Secured Party of its rights and remedies
hereunder; (viii) upon any executive officer of Debtor obtaining actual
knowledge thereof, Debtor shall promptly notify Secured Party in writing of
any event that materially and adversely affects the value of any Collateral,
the ability of Debtor to dispose of any Collateral or the rights and
remedies of Secured Party in relation thereto, including, without
limitation, the levy of any legal process against any of the Collateral;
(ix) the Collateral is not being purchased or used for primarily personal,
family or household use; (x) the name of Debtor as it appears at the top of
this Agreement is Debtor's name as it appears in its legal formation
documents; (xi) Debtor's name as it appears at the top of this Agreement is
not the assumed or business name of Debtor unless otherwise indicated; (xii)
Debtor has taken all corporate action necessary to authorize the execution
and delivery of this Agreement and the legal agent who may be executing this
Agreement on behalf of Debtor has authority to execute and deliver this
Agreement; (xiii) The statements above concerning the location of Debtor's
place of business (or chief executive office), residence, mailing address
and use and location of the Collateral are true and correct; (xiv) except as
disclosed to Secured Party on Schedule 2, attached hereto and incorporated
herein by this reference, no financing statement covering the Collateral or
any part thereof has been made, and no security interest, other than the one
herein created, has attached or been perfected in the Collateral or in any
part thereof other than as set forth on Schedule 2; (xv) no dispute, right
of setoff, counterclaim or defenses exist with respect to any part of the
Collateral; (xvi) all statements in the documents pertaining to this
transaction provided or to be provided by Debtor to Secured Party are true
and correct; and (xvii) this Agreement constitutes the legal, valid, and
binding obligation of the Debtor, enforceable in accordance with its terms.
7. Debtor further represents and warrants that (i) the Collateral and the
Debtor's use thereof comply with all applicable laws, rules, and
regulations, and Debtor has obtained any consents necessary to execute,
deliver and perform its obligations under this Agreement; (ii) neither the
execution or delivery by the Debtor of this Agreement nor the performance by
Debtor of its obligations hereunder violates, conflicts with, results in a
breach of, or constitutes a default under, or will result in the creation or
imposition of any lien against or upon the Collateral of the Debtor, except
as expressly stated herein, pursuant to, or results in a change in any
material term of (a) the Articles of Incorporation or Bylaws, as amended, of
any Debtor, (b) any provision of statutory law or regulation, (c) any
judgment, decree or order of any court or any other agency of the
government, or (d) any material agreement to which any Debtor is a party or
by which Debtor's Collateral is bound; (iii) all of Debtor's filings with
the Securities and Exchange Commission made pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, are true and
correct as of the date hereof; and (iv) Debtor has been represented by
separate legal counsel in the negotiation and execution of this Agreement.
8. So long as any part of the Obligation remains unpaid, Debtor covenants
and agrees to: (i) use the Collateral with reasonable care, skill and
caution; (ii) keep the Collateral properly sheltered and not permit it to be
damaged or injured; (iii) pay, before delinquent, all taxes and other
assessments lawfully levied against the Collateral; (iv) from time to time
promptly execute and deliver to Secured Party all such other assignments,
certificates, supplemental documents, and financing statements and do all
other acts or things as Secured Party may reasonably request in order to
more fully evidence and perfect the security interest herein created; (v)
punctually and properly perform all of Debtor's covenants, duties, and
liabilities under any other security agreement, collateral pledge agreement
or contract of any kind now or hereafter existing as security for or in
connection with payment of the Obligation, or any part thereof, (vi) pay the
Obligation in accordance with the terms of the promissory note or other
documents evidencing the Obligation, or any part thereof, (vii) promptly
furnish Secured Party with any information or documents which Secured Party
may reasonably request concerning the Collateral; (viii) allow Secured Party
to inspect the Collateral and all records of Debtor relating thereto or to
the Obligation, and to make and take away copies of such records; (ix)
promptly notify Secured Party of any change (other than a change requiring
advance notice provided for herein) in any fact or circumstances warranted
or represented by Debtor in this Agreement or in any other document
furnished by Debtor to Secured Party in connection with the Collateral or
the Obligation; (x) give prior written notice to Secured Party of any change
in Debtor's place of business or chief executive office such notice to, be
given not less than fifteen (15) days before such change is made and to
specify the address, county and state to which Debtor is moving; (xi)
promptly notify Secured Party of any claim, action or proceeding affecting
title to the Collateral or any part thereof or the security interest herein,
and, at the request of Secured Party, appear in and defend, at Debtor's
expense, any such action or proceeding; (xii) except as otherwise provided
in any note or other instrument evidencing the Obligation, promptly, after
being requested by Secured Party, pay to Secured Party all amounts actually
incurred by Secured Party as court costs and/or attorney's fees incurred by
Secured, Party in enforcing this security interest and the reasonable costs
actually expended for repossession, storing, preparing for sale, or selling
any of the Collateral; and (xiii) promptly furnish Secured Party with
financial statements of Debtor upon request of Secured Party in form and
content satisfactory to Secured Party.
9. So long as any part of the Obligation remains unpaid, Debtor covenants
and agrees that, without the prior written consent of Secured Party, Debtor
will not: (i) lease, sell, assign, furnish under any contract of service,
transfer or otherwise dispose of the' Collateral, or any part thereof, other
than in the ordinary course of business; (ii) create any other security
interest in, or otherwise encumber the Collateral or any part thereof or
permit the same to be or become subject to any lien, attachment, execution,
sequestration or other legal or equitable process, or any encumbrance of any
kind or character, except the security interest herein created or set forth
on Schedule 2; (iii) allow the Collateral or any part thereof to become an
accession to other goods, other than in the ordinary course of business;
(iv) allow the Collateral or any part thereof to be affixed or attached to
any real estate except as specifically described above; or (v) cause or
permit the Collateral to be removed from the location specified above other
than in the ordinary course of business. Debtor further covenants not to use
the Collateral or permit the same to be used for any unlawful purpose or in
any manner inconsistent with the provisions or requirement of any policy of
insurance thereon. Should any covenant, duty or agreement of Debtor (except
Debtor's covenants as to insurance) fail to be performed in accordance with
its terms hereunder, Secured Party may, but shall never be obligated to
perform or attempt to perform such covenant, duty or agreement on behalf of
Debtor, and any amount expended by Secured Party in such performance shall
become a part of the Obligation (unless such amount is not a charge
authorized by applicable law), and, at the request of Secured Party, Debtor
agrees to pay such amount to Secured Party on demand.
10. In the event of Debtor's default with respect to payment of the
Obligation, each person, firm or corporation obligated to make any payment
to Debtor with respect to any part of the Collateral. (hereafter referred to
as the "Account Debtor") is hereby authorized and directed by Debtor to make
payment directly to Secured Party upon notice from Secured Party giving the
Account Debtor notice of this assignment and directing the Account Debtor to
make payment directly to Secured Party. The receipt issued by' Secured Party
and evidencing money received by Secured Party from any Account Debtor shall
be a full and complete release, discharge and acquittance to such person,
firm or corporation to the extent of any amount so paid to Secured Party.
Secured Party is authorized and empowered on behalf of Debtor, to endorse
the name of Debtor upon any check, draft or other instrument payable to
Debtor evidencing payment upon the Collateral, or any part thereof, and to
receive and apply the proceeds therefrom in accordance with the terms
hereof. All payments received by Debtor or Secured Party with respect to the
Collateral or any part thereof, at Secured Party's option, shall be
deposited in a special account by Secured Party in the name of Debtor styled
"Cash Collateral Account" and shall be applied by Secured Party as provided
in Paragraph 14 hereof. The security interest created herein shall cover all
funds in the Cash Collateral Account to secure payment of the Obligation.
If any Account Debtor of all or any part of the Collateral fails or
refuses to make payment thereof when due, Secured Party is authorized, in
its discretion, either in its own name or in the name of Debtor, to take
such action, including, without limitation, the institution of legal action
as Secured Party shall deem appropriate for the collection of the Collateral
and any proceeds thereof with respect to which a delinquency exists.
Regardless of any other provision hereof, however, Secured Party shall never
be liable for its failure to collect, or for its failure to exercise
diligence in the collection of any of the Collateral or any proceeds
thereof, nor shall it be under any duty whatever to anyone except to account
for the funds that it shall actually receive hereunder. Furthermore,
Secured Party shall have no duty to fix or preserve the rights against prior
parties, if any, to the Collateral.
11. Debtor represents and warrants that Debtor has full right, title and
ownership to all of the Collateral described herein. Debtor further
covenants that it will not cause any of the Collateral to be sold, assigned
or otherwise transferred to any subsidiary of Debtor or to any other third
party for so long as this Agreement is in effect without the written consent
of Secured Party at its sole discretion.
12. Debtor further covenants and agrees to keep the Collateral insured in
such amounts, against such risks and with such insurers (i) as set forth in
any note or other document evidencing the Obligation; or (ii) if no such
note or other document provides for insurance, then such insurance as
Secured Party reasonably requires, provided, however, if the Obligation is
subject in whole or in part to the Federal Truth In Lending Act or
applicable state law, such insurance will be required by Secured Party only
in compliance with such law. All such policies of insurance shall be written
for the benefit of Secured Party and Debtor, as their interest may appear,
and shall provide for at least ten (10) days' prior written notice of
cancellation to Secured Party. At the request of Secured Party, Debtor
shall promptly furnish to Secured Party evidence of such insurance in form
and content satisfactory to Secured Party. If Debtor fails to perform or
observe any applicable covenants as to insurance on the Collateral contained
or referred to herein, Secured Party may at its option obtain insurance on
only Secured Party's interest in the Collateral with any premium thereby
paid by Secured Party to become a part of the Obligation and to bear
interest at Maximum Rate as defined in the Note, such rate to be charged
from the date Secured Party advances funds to pay such premium until the
amount of such premium is paid by Debtor to Secured Party. In the event
Secured Party maintains such substitute insurance, the additional premium
for such insurance shall be due and payable by Debtor to Secured Party in
accordance with specific written notification delivered to Debtor by Secured
Party or sent by Secured Party to Debtor. The obligation of Debtor to pay
any such additional premium and any interest accruing thereon shall be
secured by and entitled to all of the benefits of this Agreement. In the
event Debtor should subsequently provide Secured Party with satisfactory
evidence of maintenance by Debtor of required insurance, such substitute
insurance obtained by Secured Party shall be cancelled, and appropriate
adjustments and/or refunds shall be made by Secured Party in favor of
Debtor. Debtor hereby grants Secured Party a security interest in any
refunds of unearned premiums in connection with any cancellation, adjustment
or termination of any policy of insurance required by Secured Party and in
all proceeds of such insurance, and hereby appoints Secured Party its
attorney-in-fact to endorse any check, or document that may be payable to
Debtor in order to collect such refunds or proceeds. Any such sums collected
by Secured Party shall be credited, except to the extent applied to the
purchase by Secured Party of similar insurance, to any amounts then owing on
the Obligation, and the balance, if any, shall be promptly refunded to
Debtor.
13. The term "default" as used herein, means the occurrence of any of the
following events: (i) the failure of Debtor to timely pay the Obligation or
any part thereof; (ii) the default or other failure of Debtor to perform any
covenant, condition, obligation or agreement of Debtor under this Agreement
or any other security document of any kind securing or assuring payment of
the Obligation, securing the collateral or any part thereof; (iii) the
insolvency of Debtor; (iv) the levy against the Collateral or any part
thereof of any execution, attachment, sequestration or other writ; (v) the
appointment of a receiver of Debtor or of the Collateral or any part
thereof; (vi) the adjudication of Debtor as a bankrupt; (vii) the filing, by
way of petition or answer of any petition or other pleading seeking
adjudication of Debtor as a bankrupt, an adjustment of Debtor's debts or any
other relief under any bankruptcy reorganization, debtor's relief or
insolvency laws now or hereafter existing; (viii) when Secured Party in
good faith believes that the prospect of payment of the Obligation or
performance by Debtor of any of Debtor's covenants, agreements or other
duties hereunder, is impaired; (ix) the receipt by Secured Party of
information establishing that any representation or warranty made by Debtor
herein or in any other document delivered by Debtor to Secured Party in
connection herewith is false, misleading or erroneous; (x) any action by
Debtor, without the prior written consent of Secured Party, in creating in
favor of anyone, other than Secured Party, any other security interest in
the Collateral or any part thereof or otherwise encumbering or permitting
the same to become subject to any lien, attachment, execution, sequestration
or other legal or equitable process; (xi) failure by Debtor to pay any other
indebtedness to Secured Party when due; and/or (xii) an Event of Default
under the Note.
14. Upon the occurrence of a default, in addition to any and all other
rights and remedies which Secured Party may then have hereunder or under the
applicable provision of the Uniform Commercial Code as adopted and enacted
in Texas, as amended (the "Code") or other applicable law or agreements,
Secured Party at its option may (i) declare the entire unpaid balance of
principal of and all earned interest on the Obligation immediately due and
payable, without notice of any kind, including, without limitation, notice
of intent to accelerate and notice of acceleration, demand, or presentment,
which are hereby waived, except as otherwise expressly provided herein; (ii)
require Debtor to assemble the Collateral and deliver it to Secured Party at
a place to be designated by Secured Party which is reasonably convenient to
both parties; (iii) render unusable any equipment which may be part of the
Collateral; (iv) reduce its claim to judgment, foreclose or otherwise
enforce its security interest in all or any part of the Collateral by any
available judicial procedure; (v) sell, lease, or otherwise dispose of, at
the office of Secured Party, on the premises of Debtor or elsewhere, as
chosen by Secured Party, all or any part of the Collateral, in its then
condition or following any commercially reasonable preparation or
processing, and any such sale or other disposition may be 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 Secured Party's power of sale, but sales may be made from time
to time until all of the Collateral has been sold or until the Obligation
has been paid in full), and at any such sale it shall not be necessary to
exhibit the Collateral; (vi) at Secured Party's discretion, retain the
Collateral in satisfaction of a promissory note or notes or other document
evidencing the Obligation whenever the circumstances are such that Secured
Party is entitled to do so under the Code; (vii) apply by appropriate
judicial proceedings for appointment of a receiver for the Collateral or any
part thereof and Debtor hereby consents to any appointment; and/or (viii)
buy the Collateral at any public sale or private sale as permitted by the
Code and/or applicable law. Secured Party shall be entitled to apply the
proceeds of any sale or other disposition of the Collateral in the following
order: first to the payment of all of its reasonable expenses actually
incurred in collecting such proceeds, including, without limitation, the
reasonable costs actually expended for repossessing, foreclosing, storing,
preparing for sale or selling the Collateral, reasonable attorney's fees,
and legal expenses incurred by Secured Party in collection, provided,
however, that should the Debtor's payment of such charges be prohibited by
law, those charges shall not be a part hereof; and next toward payment of
the balance of the Obligation in such order and manner as Secured Party in
its discretion may deem advisable. Secured Party shall account to Debtor for
any surplus. If the proceeds are not sufficient to pay the Obligation in
full, Debtor shall remain liable for any deficiency.
In the event of a default hereunder, in addition to, and without
limitation against all other remedies available to Secured Party, Secured
Party shall have the right to enter upon the premises where the Collateral
is located, take possession of the Collateral and remove the same with or
without judicial process (if such taking without judicial process can be
done lawfully and without breach of the peace), and Debtor does hereby
expressly waive any right to any notice, legal process or judicial hearing
prior to such taking of possession by Secured Party. Debtor understands that
the right to prior notice and hearing is a valuable right and agrees to the
waiver thereof as a part of the consideration for and as an inducement to
Secured Party to enter the Note and this Agreement.
15. 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 Debtor and to any other person entitled under the Code to notice;
provided, that if the Collateral is perishable, threatens to decline
speedily in value, or is of a type customarily sold on a recognized market,
Secured Party may sell or otherwise dispose of the Collateral without
notifications, advertisement or other notice of any kind. It is agreed that
notice mailed or given not less than ten (10) calendar days prior to the
taking of the action to which the notice relates is reasonable notification
and notice for the purposes of this Paragraph 15.
16. Should any part of the Collateral come into the possession of Secured
Party, whether before or after default, Secured Party may use or operate the
Collateral for the purpose of preserving it or its value pursuant to the
order of a court of appropriate jurisdiction or in accordance with any other
rights held by Secured Party in respect of the Collateral. Debtor covenants
to promptly reimburse and pay to Secured Party, at Secured Party's request,
the amount of all reasonable expenses incurred by Secured Party in
connection with its custody, preservation, use or operation of the
Collateral, provided, however, that should the Debtor's payment of such
charges be prohibited by law, those charges shall not be a part hereof; and
all such expenses shall be a part of the Obligation. It is agreed, however,
that the risk of accidental loss or damage to the Collateral is on Debtor,
and Secured Party shall have no liability whatever for failure to obtain or
maintain insurance or to determine whether any insurance ever in force is
adequate as to amount or as to the risk insured.
17. All rights and remedies of Secured Party hereunder are cumulative of
each other and of every other right or remedy which Secured Party may
otherwise have at law or in equity or under any other contract or document
for the enforcement of the security interest herein or the collection of the
Obligation, 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. The failure of Secured Party at any time to assert or exercise any
rights granted by this Agreement shall not render the Secured Party liable
to any person concerned herein or deprive Secured Party of any rights
granted herein. All rights of Secured Party hereunder may be assigned or
transferred in whole or in part by Secured Party, as it deems advisable, and
the rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All obligations of Debtor hereunder shall bind the
heirs, legal representatives, successors and assigns of Debtor.
18. Should any part of the Obligation be payable in installments, the
acceptance by Secured Party at any time and from time to time of part
payment of the aggregate amount of all installments then matured shall not
be deemed to be a waiver of the default then existing. No waiver by Secured
Party of any default shall be deemed to be a waiver of any other subsequent
default, nor shall any such waiver by Secured Party be deemed to be a
continuing waiver. No delay or omission by Secured Party in exercising any
right or power hereunder, or under any other documents executed by Debtor as
security for or in connection with the Obligation, shall impair any such
right or power or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such right or power
preclude other or further exercise thereof, or the exercise of any other
right or power of Secured Party hereunder or under such other documents.
19. If the Obligation or any part thereof is given in renewal or extension
or applied toward the payment of indebtedness secured by a pledge, security
agreement or other lien, Secured Party shall be, and is hereby, subrogated
to all of the rights, titles, security interests and other liens securing
the indebtedness so renewed, extended or paid.
20. No provision of this Agreement or any note, instrument or document
executed by Debtor evidencing the Obligation is intended to or shall require
or permit the holder to take, receive, collect, contract for or reserve,
directly or indirectly, in money, goods or things in action, or in any other
way, any greater interest, sum or value in excess of the maximum rate of
interest permitted by the law in effect in the State of Texas, federal law,
or the governing laws of any other jurisdiction, at the applicable date. In
the event that any such excess shall be nevertheless provided for, Debtor
shall not be obligated to pay such excess, but if paid, then the excess
shall be applied against the unpaid balance of the principal sum of the
Obligation or to the extent that the principal sum of the Obligation has
been paid in full by reason of such application or otherwise, such excess
shall be remitted to Debtor.
21. This Agreement shall be not severable or divisible in any way but, it is
specifically agreed that, if any provision should be invalid, the invalidity
shall not affect the validity of the remainder of this Agreement. Secured
Party and Debtor agree that the validity of this Agreement and all
agreements and documents executed in connection with this Agreement shall,
to the extent possible be governed by the laws of the State of Texas.
22. Debtor hereby irrevocably appoints Secured Party as Debtor's attorney-
in-fact, with full authority in the place and stead of Debtor and in the
name of Debtor, from time to time in Secured Party's sole and absolute
discretion, to take any action and to execute any instrument which Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, (i) to modify, in its sole
discretion, this Security Agreement without first obtaining Debtor's
approval of or signature to such modification by amending the definitions of
Copyright, Patent, and/or Trademark, as appropriate, to include reference to
any right, title or interest in any Copyrights, Patents or Trademarks
acquired by Debtor after the execution hereof or to delete any reference to
any right, title or interest in any Copyrights, Patents or Trademarks in
which Debtor no longer has or claims any right, title or interest, (ii) to
file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without
the signature of Debtor where permitted by law and (iii) after the
occurrence of a default, to transfer the Collateral into the name of Secured
Party or a third party to the extent permitted under the Texas Uniform
Commercial Code, or applicable United States law, as the case maybe.
23. All written notices permitted or required to be given pursuant to this
Agreement shall be effective if mailed or delivered to the party at the
address shown at the top of this Agreement or at such other address
previously designated in writing by a party hereto.
24. A carbon, photographic or other reproduction of this Agreement or of any
financing statement executed in connection with this transaction may be
filed as a financing statement with any filing officer authorized to accept
such filings under the Uniform Commercial Code as adopted in Texas or any
other state in the United States.
Executed as of the date first written above.
Secured Party: Debtor:
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BEST CIRCUIT BOARDS, INC.
___________________________
XXXX XXXXXX
By: _______________________
Its: ______________________
