SECURITY AGREEMENT
Exhibit
10.2
THIS
SECURITY AGREEMENT (this
“Agreement”)
is
made as of the 24th day of August, 2007, by LOGISTICAL
SUPPORT, LLC.,
a Utah
corporation, having a mailing address at 00000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000 (“Debtor”)
for
the benefit and security of DUTCHESS
PRIVATE EQUITIES FUND, LTD.,
having
a mailing address at 00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxxx, Xxxxxxxxxxxxx
00000 (the “Secured
Party”).
WHEREAS,
Debtor has executed and delivered to Secured Party one or more promissory notes
or other debentures or instruments, including, without limitation, that certain
Purchase Order Financing Agreement (as amended or otherwise modified from time
to time, the “Finance
Agreement”)
of
even date herewith between Debtor and Secured Party (collectively with the
Finance Agreement, the “Loan”)
pursuant to which the Secured Party has agreed to make certain loans and other
financial accommodations to Debtor; and
WHEREAS,
the obligations of Debtor under the Loan are to be secured pursuant to this
Agreement;
NOW,
THEREFORE, for and in consideration of any loan, advance or other financial
accommodation heretofore or hereafter made to or for the benefit of Debtor
under
or in connection with the Loan or any other Finance Documents (as defined
below), and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
CONSTRUCTION
AND DEFINED TERMS
1.01 Article
and Section Headings.
Article
and Section headings and captions in this Agreement are for convenience only
and
shall not affect the construction or interpretation of this Agreement. Unless
otherwise expressly stated in this Agreement, references In this Agreement
to
Sections shall be read as Sections of this Agreement.
1.02 Schedules
and Exhibits.
The
references in this Agreement to specific Schedules and Exhibits shall be read
as
references to such specific Schedules or Exhibits attached, or intended to
be
attached, to this Agreement and any counterpart of this Agreement and regardless
of whether they are in fact attached to this Agreement, and including any
amendments, supplements and replacements to such Schedules and Exhibits from
time to time.
1.03 Defined
Terms.
Unless
otherwise expressly stated in this Agreement, (a) capitalized terms which are
not otherwise defined herein shall have the respective meanings assigned thereto
in the UCC (as defined below); and (b) the following terms used in this
Agreement shall have the following meanings:
“Collateral”
means,
with respect to Debtor, all property and rights of Debtor in which a security
interest is granted hereunder.
“Finance
Documents”
mean,
collectively, the Loan, the Finance Agreement and any other documents or
agreements executed in connection therewith or herewith and pertaining to the
Secured Obligations.
“Lien”
Any
security interest (including security interest within the definition of
“security interest” in the UCC), encumbrance, lien (including any judgment lien,
any contract lien, any lien arising or resulting from nonpayment of any tax,
assessment, charge or other imposition, and any lien arising or resulting from
nonpayment for labor, materials, or supplies), security agreement (including
any
agreement that creates or provides for a security interest), deed of trust,
mortgage, grant, pledge, assignment, hypothecation, title retention contract,
or
other arrangement for security purposes, and any agricultural lien (including
any agricultural lien within the definition of “agricultural lien” in the UCC),
and including any of the foregoing arising by operation of statute or other
law
or the application of equitable principles, whether perfected or unperfected,
avoidable or unavoidable, consensual or nonconsensual, and any financing
statement or other similar notice document, whether or not filed, and any
agreement to give a financing statement or other similar notice document.
“Lien
Proceeding”
Any
action taken (including self help) or proceeding (judicial or otherwise)
commenced by any Person other than Secured Party for the purpose of enforcing
or
protecting any actual or alleged Lien upon any of the Collateral, and including
any foreclosure, repossession, attachment, execution or other process regarding
any of the Collateral.
“Permitted
Lien”
means
Liens in favor of the following: Commerce Funding Corporation, Vienna, VA,
Filing # 0325560441 - original & 04170C0256 & 067086324369; Triumph
Engineered Solutions, Inc., Tempe, AZ, Filing # 067078634849; Triumph
Components-Arizona, Inc., Tempe, AZ, Filing # 0420860985; Triumph
Components-Arizona, Inc., Tempe AZ Triumph Engineered Solutions, Inc., Tempe,
AZ, Filing # 0470073903; Great America Leasing Corporation, Cedar Rapids, IA,
Filing # 057026724447; CNC Associates, Inc., Oxnard, CA, Filing # 077111580070
& 067088954441; US Bancorp, Minneapolis, MN, Filing # 057053494805.
Permitted Lien shall also mean any Liens that are incurred through the normal
course of business for new equipment.
“Person”
Any
natural person, corporation, limited liability company, partnership, joint
venture, entity, association, joint-stock company, trust or unincorporated
organization and any Governmental Authority, including any receiver,
debtor-in-possession, trustee, custodian, conservator, or liquidator.
“Secured
Obligations”
All
indebtedness, liabilities and obligations which are now or may at any time
hereafter be due, owing or incurred in any manner whatsoever to Secured Party
by
Debtor, whether under this Agreement, the Finance Agreement or any other Finance
Document, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, whether at stated maturity, by acceleration
or otherwise (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the filing of a petition
in
bankruptcy or the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. § 362(a)), including, without limitation, all
charges, fees, expenses, commissions, reimbursements, premiums, indemnities
and
other payments related to or in respect of such obligations.
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“UCC”
means
the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts
on
the date of this Agreement, as may be amended or modified from time to time
after the date hereof; provided
that,
"UCC"
shall
also mean the Uniform Commercial Code as in effect from time to time in any
applicable jurisdiction.
ARTICLE
II
SECURITY
INTEREST; PERFECTION
2.01 Security
Interest.
To
secure the full and timely payment, performance and satisfaction of the Secured
Obligations, Debtor hereby collaterally assigns to Secured Party, and grants
Secured Party a security interest in, all of the following property of Debtor,
whether now owned or hereafter existing or acquired, regardless of where
located:
All
of
Debtor’s right, title and interest in and to all property constituting parts,
supplies and other raw materials and finished goods arising out of or in
connection with the Orders (as defined in the Finance Agreement), including,
without limitation, those Orders from the United States Army & Missile
Command or such materials from Xxxxxx Aerospace and any rights of Debtor in
and
to such Orders in connection with any of the foregoing. Further, to the extent
not included in the foregoing, all books and records related to the foregoing
and all products and proceeds thereof, including insurance proceeds.
2.02 Perfection
by Filing.
(a) Debtor
authorizes Secured Party to file any financing statement and agrees to execute,
in recordable form, and deliver to Secured Party any other document or
instrument, and to cause any third party to execute and deliver to Secured
Party
any other document (including financing statement termination statements),
requested by Secured Party to perfect the security interests created under
this
Agreement and to establish, maintain, and continue the first priority of the
security interests created under this Agreement.
(b) Debtor
hereby appoints Secured Party as Debtor’s attorney-in-fact, with power of
substitution, which appointment is irrevocable and coupled with an interest,
to
execute in the name of Debtor, and to transmit to, or file, record, or register
with, any Person, and at any time, any document or instrument that Secured
Party
may deem necessary or advisable for the purpose of creating, enforcing,
defending, protecting, perfecting, continuing, or maintaining any security
interest, or the perfection or priority of any security interest, created under
this Agreement.
(c) Secured
Party shall not be required to obtain Debtor’s consent or authorization for
Secured Party to file, and Secured Party shall be entitled to file, with or
without execution by Debtor (or by Secured Party as Debtor’s attorney-in-fact),
any financing statement, amendment, or other record that Secured Party may
be
authorized to file in accordance with the terms of the UCC with respect to
the
security interests created under this Agreement.
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(d) Any
financing statement or other document filed to perfect the security interests
evidenced by this Agreement may, at Secured Party’s option, describe or indicate
the Collateral in the manner that the Collateral is described in this Agreement,
or as all assets of Debtor, or as all personal property of Debtor, or by any
other description or indication of the Collateral that may be sufficient for
a
financing statement under the UCC.
(e) If
prior
to Debtor’s execution of this Agreement, Secured Party shall have filed in any
jurisdiction, or with any governmental authority, any financing statement,
amendment, or other document describing or indicating the Collateral, or
containing a description or indication of all assets of Debtor or all personal
property of Debtor comprising the Collateral, or containing any other
description or indication of the Collateral, Debtor, by executing this
Agreement, irrevocably (i) authorizes, ratifies, confirms, and adopts (A) each
such previously filed financing statement, amendment or other document, and
(B)
the filing of each such previously filed financing statement, amendment, or
other document, and (ii) agrees that each such previously filed financing
statement, amendment, or other document is valid and effective as though it
had
been authorized by Debtor and filed with Debtor’s authorization.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Debtor
makes the following representations and warranties to Secured Party, which
shall
each be continuing and in effect at all times, and Secured Party shall be
entitled to rely upon the truth, accuracy, and completeness of the following
representations and warranties without regard to any other information that
may
be now or hereafter known by or disclosed to Secured Party or any of Secured
Party’s directors, officers, employees, agents, attorneys or other advisors:
3.01 Debtor’s
Name and Identification Number.
The
name of Debtor set forth on the first page and the signature page of this
Agreement is Debtor’s correct and complete legal name. The street address for
Debtor in this Agreement is Debtor’s mailing address. Debtor's chief executive
office and principal place of business are as set forth on Schedule 3.01 hereto
(and Debtor has not maintained its chief executive office and principal place
of
business at any other location during the five (5) years preceding the date
hereof, and each other location where Debtor maintains a place of business
is
also set forth on Schedule 3.01 hereto
3.02 Permitted
Liens; Collateral.
(a) No
financing statement (other than Permitted Liens) covering any of Debtor’s rights
in the Collateral is on file in any public office except for the Permitted
Liens
; (b) Secured Party’s security interest in the Collateral is a first priority
perfected security interest, subject to no Liens other than Permitted Liens;
(c)
Debtor is and will be the lawful owner of all Collateral, free of all liens,
claims, security interests and encumbrances whatsoever, other than the security
interest hereunder and Permitted Liens, with full power and authority to execute
this Agreement and perform Debtor's obligations hereunder, and to subject the
Collateral to the security interest hereunder and (d) all information with
respect to the Collateral set forth in any schedule, certificate or other
writing at any time heretofore or hereafter furnished by Debtor to the Secured
Party is and will be true and correct in all material respects as of the date
furnished.
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3.03 Authorization
and No Conflicts.
(a)
Debtor is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation as listed on the first page of
this
Agreement; (b) the execution and delivery of this Agreement and the performance
by Debtor of its obligations hereunder are within Debtor's corporate powers,
have been duly authorized by all necessary corporate action, have received
all
necessary governmental approval (if any shall be required), and do not and
will
not contravene or conflict with any provision of law or of the articles of
incorporation or by-laws of Debtor or of any material agreement, indenture,
instrument or other document, or any material judgment, order or decree, which
is binding upon Debtor; and (c) this Agreement is a legal, valid and binding
obligation of Debtor, enforceable in accordance with its terms, except that
the
enforceability of this Agreement may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
ARTICLE
IV
AFFIRMATIVE
COVENANTS
4.01 Additional
Covenants.
Debtor:
(a) will,
at
the Secured Party’s request, at any time and from time to time, execute and
deliver to the Secured Party such financing statements, amendments and other
documents and do such acts as the Secured Party deems necessary in order to
establish and maintain valid, attached and perfected first priority security
interests in the Collateral in favor of the Secured Party, free and clear of
all
Liens and claims and rights of third parties whatsoever except Permitted Liens;
Debtor hereby irrevocably authorizes the Secured Party at any time, and from
time to time, to file in any jurisdiction any initial financing statements
and
amendments thereto that (i) indicate the Collateral (x) as all assets of Debtor
or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC of the
jurisdiction wherein such financing statement or amendment is filed, or (y)
as
being of an equal or lesser scope or with greater detail;
(b) will
keep
its records concerning the Collateral in such a manner as will enable the
Secured Party or its designees to determine at any time the status of the
Collateral;
(c) will
furnish the Secured Party such information concerning Debtor and the Collateral
as the Secured Party may from time to time reasonably request;
(d) will
permit the Secured Party and its designees, from time to time, on reasonable
notice and at reasonable times and intervals during normal business hours (or
at
any time without notice during the existence of an Event of Default) to inspect
the Collateral and to inspect, audit and make copies of and extracts from all
records and other papers in the possession of Debtor pertaining to the
Collateral, and will, upon request of the Secured Party during the existence
of
an Event of Default, deliver to the Secured Party all of such records and
papers;
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(e) will
not
permit to exist any Lien on any Collateral other than Permitted Liens;
(f) will
at
all times keep the Collateral insured under policies maintained with reputable,
financially sound insurance companies against loss, damage, theft and other
risks to such extent as is customarily maintained by companies similarly
situated, and cause all such policies to provide that loss thereunder shall
be
payable to the Secured Party as its interest may appear (it being understood
that (A) so long as no Event of Default shall be existing, the Secured Party
shall deliver any proceeds of such insurance which may be received by it to
Debtor and (B) whenever an Event of Default shall be existing, the Secured
Party
may apply any proceeds of such insurance which may be received by it toward
payment of the Secured Obligations, whether or not due, in such order of
application as the Secured Party may determine), and such policies or
certificates thereof shall, if the Secured Party so requests, be deposited
with
or furnished to the Secured Party;
(g) will
promptly pay when due all license fees, registration fees, taxes, assessments
and other charges which may be levied upon or assessed against the ownership,
operation, possession, maintenance or use of the Collateral;
(h) will
take
all steps reasonably necessary to protect, preserve and maintain all of its
rights in the Collateral; and
(i) further
agrees to take other action reasonably requested by the Secured Party to insure
the attachment, perfection and first priority of, and the ability of the Secured
Party to enforce, the security interests in any and all of the Collateral
including, without limitation, (i) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the UCC,
to
the extent, if any, that the Debtor’s signature thereon is required therefor,
(ii) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of the Secured
Party to enforce, the security interests in such Collateral, (iii) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other Person obligated on
Collateral, (iv) obtaining waivers from mortgagees and landlords in form and
substance satisfactory to the Secured Party, and (v) taking all actions required
by the UCC in effect from time to time or by other law, as applicable in any
relevant UCC jurisdiction, or by other law as applicable in any foreign
jurisdiction.
4.02 Taxes,
Assessments, Charges, and Other Impositions.
Debtor
shall pay and discharge promptly, on or before the date due, all taxes,
assessments, charges, and other impositions imposed by any governmental
authority on Debtor, or on the Collateral, relating to the ownership or use
of
the Collateral, or relating to any sale, lease, license or other disposition
of
the Collateral; provided, however, Debtor shall not be required to pay or
discharge, or to cause to be paid or discharged, any such tax, assessment,
charge, or other imposition so long as (a) the validity of such tax, assessment,
charge or other imposition is being contested in good faith by Debtor by
appropriate proceedings.
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4.03 Notice
of Lien Proceeding.
Debtor
shall give Secured Party immediate written notice of the threat by any Person
to
commence any proceedings on a material portion of the Collateral or any other
Lien Proceeding.
ARTICLE
V
NEGATIVE
COVENANTS
Debtor
covenants and agrees to the following:
5.01 Identity.
Debtor
shall not change Debtor’s name or corporate structure. If Debtor is organized
solely under the law of a single state or the United States and as to which
the
state or the United States must maintain a public record showing the
organization to have been organized, Debtor shall not organize under the laws
of
another jurisdiction.
5.02 Liens.
Debtor
shall not create, incur, assume or suffer to exist any Liens upon any Collateral
of Debtor other than Permitted Liens.
ARTICLE
VI
EVENT
OF DEFAULT; ENFORCEMENT OF SECURITY INTEREST
6.01 Any
one
or more of the following events (regardless of the reason therefor) shall
constitute an "Event
of Default"
hereunder:
(a) Any
default or event of default shall occur under the Finance Agreement or any
other
Finance Documents.
(b) Debtor
shall fail or neglect to perform, keep or observe any provision of this
Agreement or any other Finance Document and the same shall remain unremedied
for
a period of ten (10) days after notice is given to Debtor by the Secured Party.
(c) The
Secured Party shall fail to have an enforceable first priority lien on and
security interest in the Collateral.
6.02 Right
to Enforce Claim; Secured Party in Possession or
Control.
(a) Upon
the
occurrence of an Event of Default and during the continuance thereof, and in
addition to such other rights and remedies as Secured Party may have under
other
provisions of this Agreement or any other Finance Document, or under common
or
statutory law, Secured Party may reduce a claim to judgment, foreclose, or
otherwise enforce the claim, security interest, or agricultural lien by any
available judicial procedure.
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(b) If
Secured Party has possession of Collateral, (i) reasonable expenses, including
the cost of insurance and payment of taxes or other charges, incurred in the
custody, preservation, use, or operation of the Collateral are chargeable to
Debtor and are secured by the Collateral, (ii) the risk of accidental loss
or
damage is upon Debtor to the extent of a deficiency in any effective insurance
coverage, (iii) Secured Party shall keep the Collateral identifiable, but
fungible Collateral may be commingled, and (iv) Secured Party may use or operate
the Collateral (A) for the purpose of preserving the Collateral or its value,
or
(B) as permitted by an order of a court having competent jurisdiction, or (C)
for the purpose of transporting the Collateral, or (D) for the purposes of
demonstrating the use or operation of the Collateral.
6.03 Collection
and Enforcement.
After
the occurrence of an Event of Default and during the continuance thereof,
Secured Party may, without limitation,:
(a) take
any
Proceeds to which Secured Party is entitled under Section 9-315 of Article
9 of
the UCC;
(b) enforce
the obligations of Debtor or any other Person obligated on Collateral and
exercise the rights of Debtor with respect to the obligations of the Debtor
or
other Person obligated on Collateral to make payment or otherwise render
performance to Debtor, and with respect to any property that secures the
obligations of the Debtor or other Person obligated on the Collateral.
6.04 Possession
of Collateral.
(a) After
the
occurrence of an Event of Default and during the continuance thereof, Secured
Party may require Debtor to assemble the Collateral and make the Collateral
available to Secured Party at a place designated by Secured Party which is
reasonably convenient to Secured Party and Debtor. If Secured Party requires
Debtor to assemble the Collateral and make the Collateral available to Secured
Party, as described in the preceding sentence, Debtor shall do so promptly,
and
in any event within ten (10) days after Secured Party gives Debtor a notice
requesting Debtor to assemble the Collateral and make the Collateral available
to Secured Party at the place designated by Secured Party. Without limiting
Secured Party’s right to designate any place which is reasonably convenient to
Debtor for making Collateral available to Secured Party, Debtor agrees that
any
place designated by Secured Party and located within one hundred (100) miles
of
any place where Debtor stores, uses, sells, leases, licenses, or maintains
Collateral in the ordinary course of Debtor’s business shall be conclusively
deemed to be a place reasonably convenient to Debtor for making the Collateral
available to Secured Party.
(b) After
the
occurrence of an Event of Default and during the continuance thereof, Secured
Party may, pursuant to judicial process, or without judicial process if Secured
Party proceeds without breach of peace, (1) take possession of the Collateral
and, (2) without removal, render Equipment unusable and dispose of Collateral
on
Debtor’s premises.
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6.05 Disposition
of Collateral.
(a) After
the
occurrence of an Event of Default and during the continuance thereof, Secured
Party may sell, lease, license, or otherwise dispose of any or all of the
Collateral in its present condition or following any commercially reasonable
preparation or processing.
(b) Secured
Party may dispose of Collateral by public or private proceedings, by one or
more
contracts, as a unit or in parcels, and at any time and place and on any terms.
(c) Secured
Party may purchase Collateral (1) at a public disposition or (2) if the
Collateral is of a kind that is customarily sold on a recognized market or
the
subject of widely distributed standard price quotations, at a private
disposition.
(d) A
contract for sale, lease, license, or other disposition includes the warranties
relating to title, possession, quiet enjoyment, and the like which by operation
of law accompany a voluntary disposition of property of the kind subject to
the
contract; provided, however, Secured Party may disclaim or modify such
warranties (1) in a manner that would be effective to disclaim or modify the
warranties in a voluntary disposition of property of the kind subject to the
contract of disposition, or (2) by communicating to the purchaser a record
evidencing the contract for disposition and including an express disclaimer
or
modification of the warranties, and provided further that a Record is sufficient
to disclaim such warranties if such Record indicates “There is no warranty
relating to title, possession, quiet enjoyment, or the like in this disposition”
or uses words of similar import.
(e) Prior
to
a disposition of Collateral, Secured Party shall give Debtor, and any other
parties required to receive notice under Article 9 of the UCC, notification
as
required under Article 9 of the UCC before a sale, lease, license, or other
disposition of Collateral.
6.06 Additional
Provisions Regarding Sales and Other Dispositions.
In the
event that Secured Party shall sell or otherwise dispose of the Collateral,
or
any part thereof in accordance with this Agreement, the following additional
provisions shall be applicable to such sale or other disposition:
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(a) Such
sale
or other disposition may be at public or private sale (or at any broker’s board
or on any securities exchange) for cash, upon credit or for future delivery
as
Secured Party shall deem appropriate. Secured Party shall be authorized at
any
such sale (if Secured Party deems it advisable to do so with regard to any
type
or item of Collateral) to restrict the prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing the Collateral
for
their own use (or for their own account for investment, as applicable) and
not
with a view to the distribution or sale thereof, and upon consummation of any
such sale, Secured Party shall have the right to assign, transfer and deliver
to
the purchaser or purchasers thereof the Collateral so sold. Each such purchaser
at any such sale shall hold the property sold absolutely, free from any claim
or
right on the part of Debtor, and Debtor hereby waives (to the extent permitted
by law) all rights of redemption, stay and appraisal which Debtor now has or
may
at any time in the future have under any rule of law or statute now existing
or
hereafter enacted. Secured Party shall give Debtor at least ten (10) days’
written notice (which Debtor agrees is reasonable notice) of Secured Party’s
intention to make any sale of Collateral owned by Debtor. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in
the
case of a sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board
or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may fix
and
state in the notice of such sale, and Secured Party shall not be obligated
to
make any sale of any Collateral if Secured Party shall determine not to do
so,
regardless of the fact that notice of sale of such Collateral shall have been
given, and Secured Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice to Debtor or anyone else, be made at the time and place to which
the same was so adjourned.
(b) In
case
any sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by Secured Party until the
sale
price is paid by the purchaser or purchasers thereof, but Secured Party shall
not incur any liability in case any such purchaser or purchasers shall fail
to
take up and pay for Collateral so sold and, in case of any such failure, such
of
the Collateral may be sold again upon notice to Debtor as set forth in this
Section.
(c) At
any
public sale, Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay or appraisal on the part
of
Debtor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and
may
make payment on account thereof by using any claim then due and payable to
Secured Party from Debtor as a credit against the purchase price, and Secured
Party may, upon compliance with the terms of sale, hold, retain and dispose
of
such property without further accountability to Debtor therefor.
(d) For
purposes of any sale of Collateral in accordance with this Agreement, a written
agreement to purchase the Collateral or any portion thereof shall be treated
as
a sale thereof. Secured Party shall be free to carry out such sale pursuant
to
such agreement, and Debtor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after
Secured Party shall have entered into such an agreement, all Events of Default
shall have been remedied and the Secured Obligations paid in full.
(e) Upon
any
sale of Collateral by Secured Party (including a sale pursuant to a power of
sale granted by statute or under a judicial proceeding), the receipt of Secured
Party or of the officer making the sale shall be a sufficient discharge to
the
purchaser or purchasers of the Collateral being sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of
the
purchase money paid over to Secured Party or such officer or be answerable
in
any way for the misapplication thereof.
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ARTICLE
VII
POWER
OF ATTORNEY
7.01 Power
of Attorney; Collections by Secured Party.
(a) Debtor
hereby appoints Secured Party as Debtor’s attorney-in-fact, with power of
substitution, which appointment is irrevocable and coupled with an interest,
to
do each of the following in the name of Debtor or in the name of Secured Party
or otherwise, for the use and benefit of Secured Party, but at the cost and
expense of Debtor, and with or without notice to Debtor: (i) notify insurers
to
make payments directly to Secured Party, and to take control of the cash and
non-cash Proceeds of any Collateral or insurance; (ii) renew, extend or
compromise any of the Collateral or deal with the same as Secured Party may
deem
advisable; (iii) release, exchange, substitute, or surrender all or any part
of
the Collateral; (iv) remove from Debtor’s places of business all Collateral
Records without cost or expense to Secured Party; (v) make such use of Debtor’s
places of business as may be reasonably necessary to administer, control and
collect the Collateral; (vi) repair, alter or supply the Collateral to fulfill
in whole or in part the purchase order or similar order; (vii) demand, collect,
give receipt for, and give renewals, extensions, discharges and releases of
any
of the Collateral; (viii) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the Collateral;
(ix) settle, renew, extend, compromise, compound, exchange or adjust claims
with
respect to any of the Collateral or any legal proceedings brought with respect
thereto; (x) indorse the name of Debtor upon any item of payment relating to
the
Collateral or upon any proof of claim in bankruptcy against any Collateral;
and
(xi) institute and prosecute legal and equitable proceedings to reclaim any
of
the Collateral. Secured Party agrees that it shall not exercise any power or
authority granted under this power of attorney unless an Event of Default has
occurred and is continuing. The foregoing power of attorney is in addition
to
any other power of attorney that may be granted to Secured Party under any
Finance Document.
(b) NONE
OF
SECURED PARTY OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO DEBTOR FOR ANY ACT OR FAILURE TO ACT
UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
___________
___________ 12 DHL BWL
11
ARTICLE
VIII
GENERAL
PROVISIONS
8.01 Remedies
Cumulative.
Upon
the occurrence and during the continuance of any Event of Default, and in
addition to such other rights and remedies as Secured Party may have under
other
provisions of this Agreement or any other Finance Document, Secured Party may
exercise any one or more of its rights and remedies under common or statutory
law. No failure or delay on the part of Secured Party in exercising any right,
power or privilege hereunder or under any other Finance Document and no course
of dealing between Debtor or any other Obligor or other Person and Secured
Party
shall operate as a waiver thereof; nor shall any single or partial exercise
of
any right, power or privilege hereunder or under any other Finance Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any rights or
remedies which Secured Party would otherwise have and may be exercised
simultaneously. No notice to or demand on Debtor in any case shall entitle
Debtor or any other obligor or any other Person to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of Secured Party to any other or further action in any circumstances without
notice or demand.
ARTICLE
IX
MISCELLANEOUS
9.01 Debtor
agrees to pay all expenses, including reasonable attorney's fees and charges
(including time charges of attorneys who are employees of Secured Party) paid
or
incurred by Secured Party in endeavoring to collect the Secured Obligations
of
Debtor, or any part thereof, and in enforcing this Agreement against Debtor,
and
such obligations will themselves be Secured Obligations.
9.02 No
delay
on the part of Secured Party in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by Secured Party
of any right or remedy shall preclude other or further exercise thereof or
the
exercise of any other right or remedy.
9.03 This
Security Agreement shall remain in full force and effect until all Secured
Obligations have been paid in full. If at any time all or any part of any
payment theretofore applied by the Secured Party to any of the Secured
Obligations is or must be rescinded or returned by the Secured Party for any
reason whatsoever (including the insolvency, bankruptcy or reorganization of
Debtor), such Secured Obligations shall, for the purposes of this Agreement,
to
the extent that such payment is or must be rescinded or returned, be deemed
to
have continued in existence, notwithstanding such application by the Secured
Party, and this Agreement shall continue to be effective or be reinstated,
as
the case may be, as to such Secured Obligations, all as though such application
by the Secured Party had not been made.
9.04 The
rights and privileges of Secured Party hereunder shall inure to the benefit
of
its successors and assigns.
12
9.05 Secured
Party’s Rights to Release Obligors; etc. Secured Party may take or release other
security, may release any party primarily or secondarily liable for any Secured
Obligations or other indebtedness to Secured Party, may grant extensions,
renewals or indulgences with respect to such Secured Obligations or other
indebtedness and may apply any other security therefor held by Secured Party
to
the satisfaction of such Secured Obligations or other indebtedness, all without
prejudice to any of Secured Party’s rights under this Agreement.
9.06 Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon delivery, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, so long as it is properly addressed. The addresses and
facsimile numbers for such communications shall be:
|
If
to Debtor:
Logistical
Support, LLC.
00000
Xxxxxxxx Xx
Xxxxxxxxxx,
XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
|
|
|
If
to the Secured Party:
Dutchess
Capital Management, LLC
Xxxxxxx
Xxxxxxxx
00
Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
|
9.07 Term.
The
term of this Agreement shall commence with the date of this Agreement and shall
continue in full force and effect and be binding upon Debtor until all Secured
Obligations of Debtor to Secured Party shall have been fully paid and satisfied
and Secured Party shall have given Debtor written notice of the termination
of
this Agreement (excluding provisions that by their terms survive termination
of
other provisions of this Agreement or survive the termination of the security
interest created under this Agreement). Secured Party shall not be obligated
to
give Debtor written notice of termination of this Agreement, or to terminate
any
financing statements or other Lien Notices, until all Secured Obligations of
Debtor to Secured Party shall have been fully paid and satisfied and there
is no
commitment on the part of Secured Party to make an advance, incur an obligation
or otherwise give value, and Debtor shall have given Secured Party a written
demand requesting the termination of this Agreement and any financing statements
at which time Secured Party shall execute and deliver such documents, at
Debtor’s expense, as are necessary to release Secured Party’s liens in the
Collateral. Notwithstanding anything to the contrary in this Agreement or any
other Finance Documents, this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by Secured
Party in respect of the Secured Obligations is rescinded or must otherwise
be
restored or returned by Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Debtor or upon the appointment
of
any intervenor or conservator of, or trustee or similar official for, Debtor
or
any substantial part of Debtor’s assets, or otherwise, all as though such
payments had not been made.
13
9.08 Further
Assurances.
Debtor
shall execute and deliver to Secured Party such further assurances and take
such
other further actions as Secured Party may from time to time request to further
the intent and purpose of this Agreement and to maintain and protect the rights
and remedies intended to be created in favor of Secured Party under this
Agreement.
9.09 Amendments,
Waivers and Consents; Successors and Assigns.
Neither
this Agreement nor any other Finance Document nor any of the terms hereof or
thereof may be amended, modified, changed, waived, discharged or terminated,
nor
shall any consent be given, unless such amendment, modification, change, waiver,
discharge, termination or consent is in writing signed by Secured Party and
Debtor. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the Secured
Obligations have been fully paid and satisfied and this Agreement has been
terminated, (ii) be binding upon Debtor and its successors and assigns, and
(iii) inure, together with the rights and remedies of Secured Party hereunder,
to the benefit of Secured Party and Secured Party’s successors, transferees and
assigns. This Agreement may not be assigned by Debtor without prior written
consent of Secured Party, which consent may be withheld in Secured Party’s sole
discretion.
9.10 Entire
Agreement.
This
Agreement and any other Finance Documents are a complete and exclusive
expression of all the terms of the matters expressed therein, and all prior
agreements, statements, and representations, whether written or oral, which
relate thereto in any way are hereby superseded and shall be given no force
and
effect. No promise, inducement, or representation has been made to Debtor which
relates in any way to the matters expressed in this Agreement and in any other
Finance Documents, other than what is expressly stated herein and in such
Finance Documents.
9.11 No
Strict Construction.
The
parties hereto have participated jointly in the negotiation and drafting of
this
Agreement. In the event of any ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Agreement.
9.12 Governing
Law.
This
Agreement and all related instruments and documents and the rights and
obligations of the parties hereunder and thereunder shall, in all respects,
be
governed by, and construed in accordance with, the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles,
regardless of the location of the Collateral, excepting, however, that the
Uniform Commercial Code (or decisional law) of a jurisdiction other than the
Commonwealth of Massachusetts may provide the method of perfection, the effect
of perfection or non-perfection, or the priority of liens and security interests
created under this Agreement.
14
9.13 DISPUTES
SUBJECT TO ARBITRATION.
The
parties to this Agreement will submit all disputes arising under it to
arbitration in Boston, Massachusetts before a single arbitrator of the American
Arbitration Association (“AAA”). The arbitrator shall be selected by application
of the rules of the AAA, or by mutual agreement of the parties, except that
such
arbitrator shall be an attorney admitted to practice law in the Commonwealth
of
Massachusetts. No party to this agreement will challenge the jurisdiction or
venue provisions as provided in this section. Nothing in this section shall
limit the Secured Party’s right to obtain an injunction for a breach of this
Agreement from a court of law.
9.14 Severability.
Any
provision of this Agreement, or of any other Finance Document, that is
prohibited by, or unenforceable under, the laws of any jurisdiction shall,
as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, Debtor hereby waives
any provision of law which renders any provision of this Agreement or any other
Finance Document prohibited or unenforceable in any respect.
9.15 Counterparts.
This
Agreement may be executed in counterparts and each shall be effective as an
original, and a photocopy, facsimile or telecopy of this executed Agreement
shall be effective as an original. In making proof of this Agreement, it shall
not be necessary to produce more than one counterpart, photocopy, facsimile,
or
telecopy of this executed Agreement.
9.16 Time.
Time is
of the essence of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
15
IN
WITNESS WHEREOF,
and
intending to be legally bound hereby, the undersigned have executed this
Agreement as of the date first above written.
|
DEBTOR:
LOGISTICAL
SUPPORT, LLC.
|
||
| |
|
|
| By: | ||
|
Name: Xxxxx X. Xxxxxxx |
||
|
Title: Chief
Executive Officer
|
||
|
SECURED
PARTY:
|
||
| |
|
|
| By: | ||
|
Name:____________________________
|
||
|
Title:_____________________________
|
||
16
