Exhibit 10:28
COMMERCIAL SECURITY AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$1,529,784.00 06-16-1999 06-16-2000 *** 3200548-9002 076
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References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item. Any
item above containing *** has been omitted due to text length limitations.
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GRANTOR: WELLINGTON HALL, LIMITED LENDER: LEXINGTON STATE BANK
000 XXXX XXXX XXXX XXX XXX XXXXX
XXXXXXXXX, XX 00000 XX XXX 000
XXXXXXXXX, XX 00000
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THIS COMMERCIAL SECURITY AGREEMENT dated June 16, 1999, is made and executed
between Wellington Hall, Limited ("Grantor") and Lexington State Bank
("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights state in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
indebtedness and performance of all other obligations under the Note and this
Agreement:
All Inventory, Accounts Receivable, Equipment, Machinery, Furniture and
Fixtures now owned or hereafter acquired.
In addition, the word " Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A) All accessions, attachments, accessories, replacements and additions to
any of the collateral described herein, whether added now or later.
(B) All products and produce of any of the property described in this
Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction,
loss or other disposition of any of the property described in this
collateral section, and sums due from a third party who has damaged or
destroyed the Collateral or from that party's insurer, whether due to
judgment, settlement or other process.
(E) All records and date relating to any of the property described in this
collateral section, whether in the form of a writing, photograph,
microfilm,microfiche, or electronic media, together with all of Grantor's
right, title and interest in and to all computer software required to
utilize, create, maintain, and process any such record or data on
electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a non purchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable la. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under "Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Property unless and until such
a notice is given.
RIGHT OF SETOFF. Grant grants to Lender a contractual security interest in, and
hereby assigns, conveys, delivers, pledges and transfers to Lender, all
Grantor's right, title and interest in and to all Grantor's accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Grantor may open in the future. However, this does not include any XXX or Xxxxx
accounts, or any trust accounts for which the grant of a security interest would
be prohibited by law. Grantor authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and warrants to Lender that:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender and and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. This is a continuing Security Agreement and will
continue in effect even though all or any part of the Indebtedness is paid
in full and even though for a period of time the Grantor may not be
indebted to Lender.
NOTICE TO LENDER. Grantor will notify Lender in writing at Lender's address
shown above (or such other addresses as Lender may designate from time to
time) prior to (1) change in Grantor's name, (2) change in Grantor's
assumed business name(s), (3) change in the management of Grantor, (4)
change in the authorized signer(s), (5) change in Grantor's principal
office address, (6) conversion of Grantor to a new or different type of
business entity, or (7) change in any other aspect of Grantor that directly
or indirectly relates to any agreements between Grantor and Lender. No
change in Grantor's name will take effect until after Lender has been
notified.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or Agreement governing Grantor or to which Grantor is a party, and
its certificate or article of Incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral. There shall be no setoffs or counterclaims against
any of the Collateral, and no agreement shall have been made under which
any deductions or discounts may be claimed concerning the Collateral except
those disclosed to Lender in writing.
LOCATION OF COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral at Grantor's address shown
above or at such other locations as are acceptable to Lender. Upon Lender's
request, Grantor will delivery to Lender in form satisfactory to Lender a
schedule of real properties and Collateral locations relating to Grantor's
operations, including without limitation the following: (1) all real
property Grantor owns or is purchasing: (2) all real property Grantor is
renting or leasing: (3) all storage facilities Grantor owns, rents, leases,
or uses; and (4) all other properties where Collateral is or may be
located.
REMOVAL OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor shall not remove the Collateral from its existing
location without Lender's prior written consent. Grantor shall, whenever
requested, advise Lender of the exact location of the collateral.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the collateral.
Grantor shall not pledge, mortgage, encumber or otherwise permit the
Collateral to be subject to any lien, security interest, encumbrance, or
charge, other than the security interest provided for in this Agreement,
without the prior written consent of Lender. This includes security
interests even if junior in right to the security interest granted under
this Agreement. Unless waived by Lender, all proceeds from any disposition
of the collateral (for whatever reason) shall be held in trust for Lender
and shall not be commingled with any other funds; provided however, this
requirement shall not constitute consent by Lender to any sale or other
disposition. Upon receipt, Grantor shall immediately deliver any such
proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that Grantor holds goods
and marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to cause
others to keep and maintain the Collateral in good order, repair and
condition at all times while this Agreement remains in effect. Grantor
further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that no
lien or encumbrance may ever attach to or be filled against the collateral.
INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to examine and
inspect the collateral wherever located.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, it use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in he Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged with fifteen (15) days, Grantor shall deposit with Lender
ash, a sufficient corporate surety bond or other security satisfactory to
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COMMERCIAL SECURITY AGREEMENT
(Continued)
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Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of collateral. In any contest Grantor shall
defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the collateral. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that
such taxes, assessments, and governmental and other charges have been paid
in full and in a timely manner.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used in violation of any Environmental Laws or for the
generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for Hazardous Substances. Grantor
hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Grantor becomes liable to cleanup or
other costs under any Environmental Laws, and (2) agrees to indemnify and
hold harmless Lender against any and all claims and losses resulting from a
breach of this provision of this Agreement. This obligation to indemnify
shall survive the payment of the Indebtedness and the satisfaction of this
Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of LEnder will delivery to
Lender form time to time the policies or certificates of Insurance in form
satisfactory to Lender, including stipulations that covers will not be
canceled or diminished without at least ten (1) ) days' prior written
notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not bee impaired in any way by an act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including if Lender so
chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lendor
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the Proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funs are insufficient,
Grantor shall upon demand pay any deficiency to Lender. The reserve funds
shall be held by Lender as a general deposit and shall constitute a
non-interest-bearing account which Lender may satisfy by payment of the
insurance premiums required to be paid by Grantor as they become due.
Lender does not hold the reserve funds in trust for Grantor, and lender is
not the agent of Grantor for payment of the insurance premiums required to
be paid by Grantor. The responsibility for the payment of premiums shall
remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonable request including the following: (1) the name of the
insurer; (2) the risks insured; (3) the amount of the Policy; (4) the
property insured; (5) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and
(6) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR' S RIGHT TO POSSESSION. Until default, Grantor may have possession of
the tangible personal property and beneficial use of all the Collateral and may
use it in any lawful manner no inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply o any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's security interest in such collateral. If
Lender at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstance, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect, preserve or
maintain any security interest given to secure the Indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interest, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral all such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note form the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option, will (A) be payable on demand, (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy, (2) the remaining term of the Note, or (3) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Collateral also will secure payment of these amounts. Such right
shall be in addition to all other right san remedies to which Lender may be
entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Grantor fails to make any payment when due under the
indebtedness.
OTHER DEFAULTS. Grantor fails to comply with or to perform any other term,
obligation, covenant or condition contained in this agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Grantor or on Grantor's behalf under this Agreement,
the Note, or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to crate a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a received
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
government agency against any collateral securing the Indebtedness. This
includes a garnishment of any of Grantor's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to guarantor, endorser, surety or accommodation party of any of the
Indebtedness or guarantor, endorser, surety, or accommodation party dies or
becomes incompetent.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender in good faith believes itself insecure.
CURE PROVISIONS. If any default, other than a default in payment, is
curable and if Grantor has not been given a notice of a breach of the same
provision of this Agreement within the preceding twelve (12) months, it may
be cured (and no event of default will have occurred) if Grantor, after
receiving written notice from Lender demanding cure of such default: (a)
cure the default with fifteen (15) days; or (b) if the cure requires more
than fifteen (15) days, immediately initiate steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter
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COMMERCIAL SECURITY AGREEMENT
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continue and complete all reasonable and necessary steps sufficient to
produce compliance as soon as reasonable practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of
the following rights and remedies:
ACCELERATE INDEBTEDNESS. Declare all Indebtedness, including any prepayment
penalty which Grantor would be required to pay, immediately due and
payable, without notice of any kind to Grantor.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantors
assemble the Collateral and make available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
collateral contains other goods not covered by this Agreement at the time
of repossession, grantor agrees Lender may take such other goods provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
or otherwise deal with the Collateral or proceeds thereof in Lender's own
name or that of Grantor. Lender may sell the Collateral at public auction
or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender will
give Grantor reasonable notice of the time after which any private sale or
any other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the collateral, shall become a part of the Indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid.
APPOINT RECEIVER. Lender shall have the right to have a received appointed
to take possession of all or any part of the Collateral, with the power to
protect and preserve the collateral, to operate the Collateral preceding
foreclosure or sale, and to collect the Rents from the Collateral and apply
the proceeds, over and above the cost of the receivership, against the
indebtedness. The received may serve without bond if permitted by law.
Lender's right to the appointment of a receiver shall exist whether or not
the apparent value of the Collateral exceeds the Indebtedness by a
substantial amount. Employment by Lender shall not disqualify a person from
serving as a received.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and received
the payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies, instruments,
chattel paper, chooses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, xxx for, foreclose, or
realize on the Collateral as Lender may determine whether or not
indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf of and in he name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the indebtedness due to Lender after application of all amounts received
form the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lenders shall have all the rights and remedies
of a secured creditor under the provision of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
inequity, or otherwise
ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
Lender's rights and remedies, whether evidence by this Agreement, the
Related Documents, or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any
remedy will not bar any other remedy, and an election to make expenditures
or to take action to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provision are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES: EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Grantor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgement collection services. Grantor also shall pay all court cost
and such additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
GOVERNING LAW. This Agreement will be governed by, construed and enforced in
accordance with federal law and the laws of the State of North Carolina. This
agreement has been accepted by Lender in the State of North Carolina.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law), when
deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
For notice purposes, Grantor agrees to keep Lender informed at all times of
Grantor's current address. Unless otherwise provided or required by law, if
there is more than one Grantor, any notice g given by Lender to any Grantor
is deemed to be notice given to all Grantors
POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the continuation
of the perfection of Lender's security interest in the collateral.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this AGreement. Unless otherwise required
by law, the illegality, invalidity, or unenforceability of any provision of
this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.
SUCCESSORS AND ASSIGNS. Abject to any limitations stated in his agreement
on transfer of Grantor's interest, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns. If
ownership of the Collateral becomes vested in a person other than Grantor,
Lender, without notice to Grantor, may deal with Grantor's successors with
reference to this Agreement and the indebtedness by way o forbearance or
extension without releasing Grantor from the obligations of this Agreement
or liability under the Indebtedness.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made by Grantor in this Agreement shall survive
the execution and delivery of this AGreement, shall be continuing in
nature, and shall remain in full force and effect until such time as
Grantor's indebtedness shall be paid in full.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the
Page 4
COMMERCIAL SECURITY AGREEMENT
(Continued)
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singular shall include the plural, and the plural shall include the singular, as
the context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code:
AGREEMENT. The word " Agreement" means this Commercial Pledge Agreement, as
this Commercial Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Pledge Agreement from time to time.
BORROWER. The word " Borrower" means Wellington Hall, Limited, and all
other persons and entities signing the Note in whatever capacity.
COLLATERAL. The word "Collateral: means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral
Description section of this Agreement.
DEFAULT. The word "Default" means the Default set forth in this Agreement
in the section titled "Default".
ENVIRONMENTAL LAWS. The words " Environmental Laws' mean any and all state
and federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L No. 99-499
("XXXX"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and REcover Act, 42 U.S.C..
Section 6901, et seq., or other applicable state or federal laws, rules or
regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the Default section of this
Agreement. GRANTOR. The word "Grantor" means Wellington Hall, Limited.
HAZARDOUS SUBSTANCES. The words' Hazardous Substances' mean materials that,
because of their quantity, concentration or physical chemical or infectious
characteristics, may cause or pose a present or potential hazard to human
health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. The words
"Hazardous Substances" are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term
"hazardous Substances" also includes, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos.
INDEBTEDNESS. The word "indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Grantor irresponsible under this Agreement or under any of the Related
Documents.
LENDER. the word "Lender" means Lexington State Bank, its successors and
assigns.
NOTE. The word "Note" means the Note executed by Grantor in the principal
amount of $1,529,784.00 dated June 16, 1999, together with all renewals of,
extensions of, modifications of, re financing of consolidations of, and
substitutions of the note or credit agreement.
OBLIGOR. The word "Obligor" means without limitation any and all persons
obligated to pay money or to perform some other act under the Collateral.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed connection with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JUNE 16, 1999. THIS
AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
GRANTOR: (CORPORATE SEAL)
ATTEST: /s/ XXXXXXX X. XXXXXXXX
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WELLINGTON HALL, LIMITED XXXXXXX X. XXXXXXXX, SECRETARY
BY: /s/ XXXX X. XXXXXXX, XX. (SEAL) BY: /s/ XXXXXXX X. XXXXXXXX
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XXXX X. XXXXXXX, XX. PRESIDENT OF XXXXXXX X. XXXXXXXX, SECRETARY OF
WELLINGTON HALL, LIMITED WELLINGTON HALL, LIMITED
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