EXHIBIT 10.6
SECURITY AGREEMENT
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This Security Agreement ("Security Agreement") is made this 6th day of
April, 1998 by and between U.S. REMODELERS, INC., a Delaware corporation with an
address at 0000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxx 000 Xxxx, Xxxxxx, Xxxxx 00000
(hereinafter referred to as "Debtor") and FINOVA Capital Corporation with an
address at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter referred
to as "Secured Party").
FOR VALUED RECEIVED and intending to be legally bound hereby, the Debtor,
in consideration of and for the purpose of securing the payments of all
indebtedness and obligations of the Debtor under the Secured Promissory Term
Note ("Note") and all other indebtedness of Debtor to the Secured Party
howsoever incurred now existing or hereafter arising does hereby grant the
Secured Party its successors and assigns, a security interest pursuant to the
Uniform Commercial Code, in all the Collateral described herein.
1. Debtor hereby grants to Secured Party a continuing lien on and
security interest in the following property of Debtor (hereinafter referred to
as the "Collateral"):
(a) all equipment together with all additions, accessions,
attachments, substitutions, replacements thereof as more fully described on
Exhibit B attached hereto and made a part hereof, and
(b) all proceeds (including insurance proceeds) of all of the
foregoing.
2. The security interest hereby granted is to secure the Debtor's
obligations under the Note, as well as payment of any and all sums heretofore
and hereafter owing to Secured Party by Debtor, whether or not evidenced by any
note or other instrument and whether or not for the payment of money, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, as well as all liabilities under any other agreements with
Secured Party, now and in the future including, without limitation, any debt,
liability or obligation owing from Debtor to others which Secured Party may have
obtained by assignment or otherwise, and further, including without limitation,
all interest, fees, charges, expenses and attorneys' fees chargeable to Debtor's
account, whether provided for herein or any other agreement between Debtor and
Secured Party. (All existing and future obligations including, but not limited
to: any and all principal, interest, fees, and/or costs owed by the Debtor to
the Secured Party and indebtedness hereinafter collectively referred to as the
"Obligations").
3. The Debtor hereby agrees that if the location of the Collateral
changes from the locations listed on Exhibit "A" hereto and made part hereof,
the Debtor will immediately notify the Secured Party in writing of any additions
or changes to any location of the Collateral. Debtor hereby guarantees that it
is the absolute owner of and is in possession of all of the Collateral, and
except for any lien or encumbrance granted herein, the Collateral and each item
thereof is free and clear of all security interests, liens, and encumbrances and
adverse claims of any kind or nature whatsoever.
4. The Debtor covenants that it shall:
(a) from time to time and at all reasonable times with reasonable
notice, allow Secured Party, by or through any of its officers, agents,
attorneys, or accountants, to examine or inspect the Collateral wherever
located. The Debtor shall use its best efforts to do, obtain, make, execute and
deliver all such additional and further acts, things, deeds, assurances and
instruments as Secured Party may require to vest in and assure to Secured Party
its rights hereunder and in or to the Collateral, and the proceeds thereof,
including, but not limited to, waivers from landlords and mortgagees;
(b) immediately notify the Secured Party of any event causing a
material loss or decline in value of the Collateral, whether or not covered by
insurance, and the amount of such loss or depreciation; and
(c) have and maintain insurance at all times with respect to all
Collateral against risks of fire (including so-called extended coverage), theft,
sprinkler leakage, and other risks (including risk of flood if any Collateral is
maintained at a location in a flood hazard zone) as Secured Party may require,
in such form, in such amount, for such period and written by such companies as
may be satisfactory to the Secured Party. In the event of any failure to provide
insurance as herein provided, the Secured Party may, at its option, obtain such
insurance and the Debtor shall pay to the Secured Party, on demand, the cost
thereof. Proceeds of insurance may be applied by the Secured Party to reduce any
liability and indebtedness of the Debtor secured hereby or to repair or replace
Collateral, all in the Secured Party's exclusive discretion.
5. The Debtor will not sell or offer to sell or otherwise transfer or
grant or suffer the imposition of a lien or security interest upon the
Collateral or use any portion thereof in any manner inconsistent with this
Security Agreement or with the terms and conditions of any policy of insurance
thereon.
6. At the request of the Secured Party, the Debtor will join with the
Secured Party in executing all financing statements, continuation statements or
amendments thereto that the Secured Party may reasonably deem to be necessary
pursuant to the Uniform Commercial Code in form satisfactory to the Secured
Party in order to perfect or maintain FINOVA's perfected status in the
underlying Collateral. The Secured Party will pay the cost of preparing and
filing the same in all jurisdictions in which such filing is deemed by the
Secured Party to be necessary or desirable. A carbon, photographic or other copy
of this Security Agreement or of a UCC-1 financing statement may be filed as and
in lieu of an original UCC-1 financing statement.
7. Borrower covenants that, so long as the Obligations remain outstanding
and this Security Agreement remains in effect, it shall promptly reimburse
FINOVA for all costs, fees and expenses incurred by FINOVA in connection with
the negotiation, preparation, execution, delivery, administration and
enforcement of each of the documents related to this Security Agreement (the
"Security Documents") including, but not limited to, the attorneys' and
paralegals' fees of in-house and outside counsel, expert witness fees, lien,
title search and insurance fees, appraisal fees, and all
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other costs, expenses, taxes and filing or recording fees payable in connection
with the transactions contemplated by this Security Agreement.
8. The Debtor shall, at the option of Secured Party, be in default under
this Security Agreement upon the happening of any of the following events or
conditions ("Event of Default"):
(a) default by the Debtor in the payment, performance or observance of
any term, covenant, undertaking or liability referred to herein, or in
connection with any of the Obligations and the continuance of such default for
five (5) days, with respect to any payment default hereunder, and fifteen (15)
days, with respect to any non-payment default, after the Secured Party has given
Debtor notice thereof;
(b) falsity, inaccuracy or material breach by Debtor of any written
warranty, representation or statement made or furnished to the Secured Party by
or on behalf of the Debtor;
(c) any event which gives rise to the right of any party to accelerate
the maturity of the indebtedness of the Debtor to such party under any
indenture, agreement, or undertaking;
(d) an uninsured material loss, theft, damage, or destruction to any
of the Collateral, or the entry of any lien against or the making of any levy,
seizure or attachment thereof or thereon;
(e) dissolution, termination of existence, insolvency, business
suspension or failure, appointment of a receiver of any part of the property of
the Debtor, assignment for the benefit of creditors by the Debtor, or the
commencement of any proceedings under any federal bankruptcy or state insolvency
laws (now or hereafter enacted for the relief of debtors) by or against the
Debtor; or
(f) the occurrence of an Event of Default under the terms and
provisions of any agreement now existing or hereafter executed between the
Debtor or Borrower and the Secured Party.
After the occurrence and during the continuance of an Event of Default, the
Secured Party may declare all Obligations secured hereby immediately due and
payable and shall have, in addition to any remedies provided herein or by any
applicable law, all remedies of a secured party provided by the Uniform
Commercial Code. As permitted by such Code, the Secured Party may (i) peaceably
by its own means or with judicial assistance enter the Debtor's premises and
take possession of the Collateral, (ii) render the Collateral unusable, (iii)
dispose of the Collateral on the Debtor's premises, or (iv) require the Debtor
to assemble the Collateral and make it available to the Secured Party at a place
designated by the Secured Party. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Secured Party will give the Debtor reasonable notice of
the time and place of any public sale thereof or of the time after which any
private sale or any other intended disposition thereof is to be made. The
requirements of
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reasonable notice shall be met if such notice is sent by telephone, facsimile or
overnight mail, postage prepaid, to the business address of the Debtor shown in
this Security Agreement at least five (5) days before the time of the intended
sale or disposition. Expenses of retaking, holding, preparing for sale, selling
or the like shall include the Secured Party's reasonable attorney's fees and
legal expenses, incurred or expended by the Secured Party to enforce any
Obligations hereunder either as against the Debtor, or in the prosecution or
defense of any action, or concerning any matter growing out of or connection
with the subject matter of this Security Agreement, the collection of any
Obligations, or the Collateral pledged hereunder.
9. The Secured Party shall not be deemed to have waived any of the
Secured Party's rights hereunder or under any other agreement, instrument or
paper signed by the Debtor unless such waiver is in writing and signed by the
Secured Party. No delay or omission on the part of the Secured Party in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.
10. After the occurrence and during the continuance of an Event of
Default, the Debtor does hereby make, constitute and appoint any officer or
agent of the Secured Party as the Debtor's true and lawful attorney-in-fact,
with power to endorse the name of the Debtor or any of the Debtor's officers or
agents upon any notes, checks, drafts, money orders, or other instruments of
payment or Collateral that may come into the possession of the Secured Party in
full or part payment of any amounts owing to the Secured Party; granting to the
Debtor's said attorney full power to do any and all things necessary to be done
in and about the premises as fully and effectually as the Debtor might or could
do, including the right to compromise, settle and release all claims and
disputes with respect to the Collateral, and the Debtor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney shall be irrevocable for the life of this Security Agreement and all
transactions hereunder, but shall only be exercisable after and during the
continuance of an Event of Default.
11. All provisions herein shall inure to, and become binding upon the
successors, representatives, receivers, trustees and assigns of the parties. The
Debtor shall not delegate its duty of performance hereunder without the Secured
Party's prior written consent. The term "Security Agreement", as used in this
instrument, shall mean and include this Security Agreement, all amendments and
supplements to any of the foregoing, and all assignments, instruments and
documents submitted to the Secured Party in connection with any transaction
between the Debtor and the Secured Party. The Debtor hereby waives notice of
default, except as otherwise provided herein, and presentment, demand, protest,
and notice of dishonor as to any instrument. The Debtor hereby releases Secured
Party from all claims for loss or damage caused by any act or omission on the
part of Secured Party, its officers, agents, and employees, except for wilful
misconduct.
12. This Security Agreement, all amendments thereto, all supplements
thereof, and all acts, transactions, agreements, certificates, assignments and
transfers thereunder, and all rights of the parties hereto, shall be governed as
to their validity, enforcement, construction and effect, and
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in all other respects by the internal law of the State of Arizona (as opposed to
the conflicts of law provisions). The provisions hereof are severable, and the
invalidity or unenforceability of any provision shall not affect or impair the
remaining provisions which shall continue in full force and effect. No
modification hereof shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
13. DEBTOR IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED IN MARICOPA COUNTY, ARIZONA IN ANY AND ALL ACTIONS AND
PROCEEDINGS WHETHER ARISING HEREUNDER OR UNDER ANY OTHER AGREEMENT OR
UNDERTAKING AND IRREVOCABLY AGREES TO SERVICE OF PROCESS BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED TO THE ADDRESS OF DEBTOR SET FORTH HEREIN. DEBTOR AS AN
INDEPENDENT COVENANT IRREVOCABLY WAIVES JURY TRIAL AND THE RIGHT THERETO IN ANY
AND ALL DISPUTES BETWEEN DEBTOR AND SECURED PARTY WHETHER HEREUNDER OR UNDER ANY
OTHER AGREEMENTS, NOTES, PAPERS, INSTRUMENTS OR DOCUMENTS, WHETHER SIMILAR OR
DISSIMILAR.
14. THE DEBTOR BEING FULLY AWARE OF THE RIGHT TO NOTICE AND A HEARING ON
THE QUESTION OF THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST THE
DEBTOR BY THE SECURED PARTY UNDER THIS SECURITY AGREEMENT, AND RELATED
AGREEMENTS AND DOCUMENTS, BEFORE THE DEBTOR CAN BE DEPRIVED OF ANY PROPERTY IN
THE DEBTOR'S POSSESSION, HEREBY WAIVES THESE RIGHTS AND AGREES THAT THE SECURED
PARTY MAY ENJOY SELF-HELP OR ANY LEGAL OR EQUITABLE PROCESS PROVIDED BY LAW TO
TAKE POSSESSION OF ANY SUCH PROPERTY WITHOUT FIRST OBTAINING A FINAL JUDGMENT OR
WITHOUT FIRST GIVING THE DEBTOR NOTICE AND THE OPPORTUNITY TO BE HEARD ON THE
VALIDITY OF THE CLAIM UPON WHICH SUCH TAKING IS MADE.
15. All capitalized terms not otherwise defined herein shall have the
meaning as set forth in the Secured Promissory Term Note.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have set their hands and seals on the day and year first above written.
FINOVA CAPITAL CORPORATION U.S. REMODELERS, INC.
BY: /s/ Xxxxxxx X. Xxxxxxx BY: /s/ Xxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx, President
Assistant Vice President
ATTEST: /s/ SIGNATURE ILLEGIBLE
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Secretary
(Corporate Seal)
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